For over a year, we have been dutifully tracking several key datasets within the auto sector to find the critical inflection point in this perhaps most leading of economic indicators which will presage not only a crushing auto loan crisis, but also signal the arrival of a full-blown recession, one which even the NBER won't be able to ignore, as the US consumers are once again tapped out. A month ago we said that in our view "that moment has now arrived"; the latest data from Fitch confirms as much.
But first, for those readers who are unfamiliar with the space, we urge you to read some of our recent articles on the topic of car prices - which alongside housing, has been the biggest driver of inflation in the past 18 months - and more specifically how these are funded by the US middle class, i.e., car loans, and last but not least, the interest rate paid for said loans.
