How President Biden touts the state of the US economy under his leadership, a staggering number of Americans with auto loans are struggling to make their monthly payments.
The juxtaposition between Biden’s rhetoric and harsh economic realities for many underscores what has become a constant thorn in the president’s side: high inflation that continues to eat away at household incomes and public opinion that disapproves of his handling of the economy.
Car loans are the latest sign of such economic problems. Indeed, loans more than two months past due increased by 5.3% in December compared to the previous month and rose sharply by 26.7% compared to last year. recently published data by Cox Automotive.
Of all December loans, 1.84% were seriously delinquent (typically more than 90 days past due), up from 1.74% in November and the highest since February 2009, when the financial the crisis damaged the US economy.
People with low credit scores and bad credit history — those who took out auto loans — were especially behind on their payments.
“In December, 7.11% of subprime loans were seriously delinquent, up from 6.75% the previous month,” Cox Automotive reported. “The rate of serious mortgage delinquencies was 163 basis points higher than a year ago, and December’s rate was the highest in the data series going back to 2006.”
Even though more people are defaulting on their loans, loan defaults have yet to experience a similar spike. Auto lenders typically don’t consider a borrower in default until they’re 90 to 120 days past due, indicating a potential spike in defaults in the coming months.
The new figures, which show people are not making car payments, come at a time when Americans are living paycheck to paycheck and can’t afford basic necessities.
Prices continue remain high due to inflationwhich hit a four-decade high last summer but has slowed in the past six months.
According to the latest data, consumer inflation rose by 6.5% year-on-year in December, the slowest increase in 12 months since October 2021. At the same time, producer inflation in December rose by 6.2% over the previous 12 months. , the lowest level since March 2021.
“As inflation declines, workers’ take-home pay rises,” Biden said in remarks on the economy earlier this month. “Wages for workers are now higher than they were seven months ago, adjusted for inflation. Wages for low- and middle-income workers are up even more. All of this creates a real holiday for consumers, a real respite for families, and further proof that my the economic plan is working.”
However, while inflation is slowing, the most basic and basic costs of living — food and shelter — have jumped. Food prices rose 11.8% year-over-year, while housing costs rose 7.5% year-over-year.
Despite Biden’s comments, inflation has outpaced workers’ wages, which have risen steadily over the past two years under Biden. But adjusted for inflation, real average weekly earnings fell sharply by 3.1% between December 2021 and last month. according to the Department of Labort. Over the entire period of Biden’s presidency, wages have increased by 10% and inflation has increased by 14%.
Experts, including Rachel Gressler, a senior fellow at the Heritage Foundation, have estimated that this discrepancy has cost the average family thousands of dollars.
“The Biden administration continues to tout strong job growth throughout its tenure, but fails to mention the significant decline in inflation-adjusted wages for workers and the millions of Americans who are no longer working.” Gressler wrote. “Starting in January 2021, workers lost $3,300 in wages due to a $7,200 inflation tax that exceeded the $3,900 increase in nominal wages.”
As the cost of basic necessities rises and household purchasing power declines, many Americans are forced to make tough choices.
Nearly one in five Americans (18%) said they skipped meals or didn’t buy groceries because of high inflation in the past year, according to Nationwide study by the Retirement Institute. The data also showed that due to inflation in the past 12 months, many people canceled or delayed their health plans to see a specialist (14%), take prescribed medication (10%) or have an annual health check (11%).
At the same time, the data showed that 10% of adults have diverted funds from retirement savings to pay for health care costs, and another 14% are considering doing so this year. Among Gen Z and Millennials, the figure is 21% and 20%, respectively.
Still, Biden touted the economy’s performance, crediting his administration’s policies for helping working and middle-class Americans.
“Now, two years later, it is more clear than ever that our plan is working. We build the economy from the bottom up and in the middle. Not just from top to bottom,” Biden said at the winter meeting of the Conference of Mayors. the weekend “Because by the way, when we do this, the rich get very, very good. And everyone — the poor have an opportunity, and the middle class can breathe a little. An economy that also benefits people in the Heartland, both in our cities and across America.”
Biden also recently said the economy is moving toward a “new plateau” and is on a “winning streak,” despite fear of the coming recession.
White House press secretary Karin Jean-Pierre echoed those points, saying last week that Biden’s policies over the past two years had led to a “historic recovery” from the COVID-19 pandemic and what Biden called a “stable and sustainable” economic growth.
So did Treasury Secretary Janet Yellen, who wrote a Wall Street Journal op-ed last month making similar arguments. “The policies of the Biden administration have propelled the American economy into one of the fastest recoveries in modern history,” she wrote. “Thanks to President Biden’s plan, we have improved the economic well-being of American families and workers and strengthened the economy’s resilience in the face of significant global headwinds.”
However, Americans do not seem to believe such arguments.
For months, polls have consistently shown that most Americans disapprove of Biden’s handling of inflation and the economy in general.
New ABC News/Ipsos pollfor example, shows that only 31% of the country’s population approve of his fight against inflation and only 38% like how he handles the economy.
Such disapproval is combined with a general pessimism about upward economic mobility found in recent surveys.
Gallup, which tracks Americans’ views on the likelihood that the next generation will surpass their parents’ standard of living, found in a recent survey that hope for the American dream is at an all-time low.
According to the data, 59% of middle-income Americans earning between $40,000 and $100,000 said it was unlikely or unlikely that today’s youth would have a better life than their parents. Among those with an annual household income of less than $40,000, 48% similarly said that today’s children are unlikely to fare better than their parents.