The Silent Recession has Arrived

TL;DR

Consumer credit card delinquencies, auto loan delinquencies, and negative manufacturing index signal a potential recession.

Transcript

guys if we are not in a recession I will be absolutely surprised and here's why when you look at recessions 70% of our GDP is driven by consumers look at this article that just came out about credit card delinquencies we are at credit card delinquency rates that are higher than than are on par with the great financial crisis of 2007 to 2010 if you ... Read More

Key Insights

• 💳 Consumer credit card delinquencies and auto loan delinquencies are at concerning levels, indicating financial distress among consumers.
• 🥺 The negative Empire State Manufacturing Index suggests a decline in demand for manufactured goods, potentially leading to decreased production and economic challenges.
• ✋ The yield curve inversion and high levels of unrealized losses in banks further highlight the potential for a recession.
• 🧑‍🎓 Depleted excess savings and increased student loan payments are creating financial strain on individuals.
• 😨 Higher interest rates and costs for cars contribute to the financial burden on consumers.
• 😘 Consumer sentiment remains low, indicating a lack of confidence in the current economic state.
• 🏢 Office buildings facing negative equity can impact banks, particularly if occupancy rates decrease during a recession.

Questions & Answers

Q: How do credit card delinquencies hint at a looming recession?

High credit card delinquency rates indicate financial strain among consumers, which can lead to decreased spending, lower consumer demand, and a potential economic downturn.

Q: Why are auto loan delinquency rates a cause for concern?

Rising auto loan delinquencies suggest that consumers are struggling with their debt obligations, which can negatively impact their ability to make major purchases and contribute to economic instability.

Q: What does the negative manufacturing index indicate?

The negative manufacturing index suggests a decline in demand for manufactured goods, which can be a sign of economic downturn. This can lead to reduced production, layoffs, and further economic challenges.

Q: How does the yield curve inversion relate to a possible recession?

A yield curve inversion, where short-term interest rates are higher than long-term rates, historically precedes a recession within 18 months. The fact that this inversion occurred approximately 10 months ago raises concerns about the current state of the economy.

Summary & Key Takeaways

• Credit card delinquency rates are currently on par with those during the Great Financial Crisis of 2007-2010, indicating financial distress among consumers.

• Auto loan delinquency rates have reached their highest level since 1996, highlighting potential economic instability.

• The Empire State Manufacturing Index has surged to negative territory, surpassing expectations and pointing to a decline in demand.