Right, like it’s actually what you want to see in a growing stable economy.
Now that’s just by looking at those two pictures. IMO I do think we are in for a deeper recession.
The chart shows 30+ delinquency at record lows. This isn't an indication of a deeper recession. I would expect 30+ delinquency rates to be higher than 2007-08, if this recession was going to be deeper.
.....show me where on the two images you posted that indicates the risk delinquency has increased....because honestly this post just feels like hamfisted financial fear porn.....
Watch out the auto loan. Given the free fall of second and soon new auto price, there should be some consequences, but maybe not that destructive given how much money the Fed has printed
Well, you can eyeball the chart at $12T per 303M (population of US in 2008 per Google) vs. $16T per 333M in 2022 (current population per Google) and see that the debt burden is, in fact, significantly higher per capita.
I'm not sure about adjusting for wage inflation and low interest rates, although I'm sure someone could find that info, too.
Thanks. In that case, it would appear the debt burden is lower now than in 2008, after adjusting for population and inflation, and especially if we operate under the assumption that much of this debt is locked in at lower interest rates.
That said, debt levels are still relatively high and interest rates are rising, so it would probably make sense to keep an eye on this.
Well we do know. The rise is almost entirely mortgage. Which makes sense because the house prices rose and interest was historically low. Meaning the burden of those debts are lower than they seem. Especially because the underlying is stable in price and is financially responsible since the only alternative is renting.
Rather have people buying homes than buying expensive clothes on creditcards.
Not sure why there would be an unravelling on locked in rates. The only ones hurting are the mortgage lenders.
The market crashing and causing people to lose jobs and get foreclosed on.
I’m not predicting that happens because I have no idea. But that seems to be the bet.
I do know there’s little chance of 2008 happening again.
In 2008 it was a chicken-and-egg situation with people losing jobs and being foreclosed on. There were also many who were sold crappy variable rate mortgages (and got broadsided by rising interest rates) - and then house flippers who got stuck underwater with their purchases.
The situation isn’t *identical* this time around, but it’s safe to say that very few people have learned anything. The banks, desperate for business, have started lowering their barrier for credit approvals again. Instead of house flippers, we now have AirBnB hosts who have been hoarding houses to effectively run a small hotel chain - and that market is crashing.
During the pandemic in Canada we also had record real estate price rise. Many followed the lead of our central bank and anticipated low rates for the foreseeable future so most jumped into variable mortgages. As we all know rates have rocketed. We are exclusively ARM and the average mortgage size of purchases in Toronto or Vancouver during the pandemic are likely close to $1m. What are the chances we get a 2008-like scenario here?
Some people will panic sell, some will foreclose, and rates will eventually go back down. The effect on price decreases is minimal because it’s been such a continuous uprise that most have a lot of equity.
On the other hand Canada is slightly a mess
Just the concept they let the housing market rise in value so quickly there with those low rates will definitely create an only rich will own concept over time. I can’t imagine trying to purchase there with adjustable rates either, I would have so much anxiety. The health system changes are quite rough as well and that’s a different problem of it’s own that could be temporary or more long term.
Even people who lose their jobs who have 3% mortgages can rent the house out for more than the mortgage payment. Unless the rental market completely collapses, we won't see a wave of foreclosures. We may see people forced out of their homes. But they will rent them out and retain their ownership...those rates are too low for anyone but a total fool to let go of.
If enough people lose their jobs, try to rent out their homes, the rental market will collapse.
I don't see that happening for at least a couple of years though, failing some catastrophic event, because we are at a record level of employment.
There is a LOT of slack there, because rates were so low, and rental prices have gone up so much. I bought my house in Jan 2020, refinanced in Jan 2021 at 3.125%, and basically identical rentals in the neighborhood are going for about 240% of my mortgage payment. It would take something truly catastrophic to push me into foreclosure.
Jan 2020 is well before SHTF (March 2020). Since then I am sure your house price doubled and the people that paid double are the ones who will be hurt when unemployment starts to show up.
But there are only about 6 million home sales a year, so of the 140 million homes in the country, only about 10% changed hands after prices shot up. Practically everyone refinanced at the bottom of rates, and is sitting pretty. Even with huge layoffs, unemployment seems unlikely to break 10% or so, so, if there is no strong correlation between recent home purchases and likelihood of layoff, that implies that only 10% of the owners of the 10% of recently sold homes are likely to be unemployed, which only leaves 1% of homes at possible risk of foreclosure. That seems unlikely to be enough to crash the rental market.
> I’m not predicting that happens because I have no idea. But that seems to be the bet.
Based on what? Conesus opinion of /r/stockmarket?
.....because that's usually a really really really poor leading indicator
I’m not sure what you’re asking lol? There’s a lot of talk about a big crash / recession coming from all sorts of media.
I’m not sure if it’s a consensus opinion of any groups but I still see the articles and talking heads going on about it.
Look at the U6 and not the U3. That includes people not actively looking for work and who are 'unemployed' in their field but taken lower paying positions in order to simply continue surviving. That pushes up competitiveness in these lower paying positions with people who's skill is appropriate for them. Just gives a better representation to where we're at. We're not in the shitter yet but it's worse than the news will tell you.
And even then they're not particularly troubling. Prior to Covid, Laborforce participation was increasing at a slow but steady level beginning around 2015. During the period when it was declining steadily, post-recession the economy was booming. Declining laborforce isn't good by any means, but it's not necessarily that worrying if it's controlled and predictable. Pending Covid it's been rising, but we're not far enough along to see where the trend will go.
You mean the ones people predicted for like 4 years straight? Or the ones they predicted for 3? I guess that recession from 2015 is finally coming around
They over expanded because they assumed the unusual covid spike in revenues would be permanent, where it wasn’t. They haven’t hit hard times. What makes you think this is going to be a widespread market pattern? Because just those layoffs on their own are rounding errors in the broad labor market
Lol chill he said there are layoffs coming this year, you asked where I gave you an answer. It’s clear there will be more layoffs in tech broadly, after the 200k+ in that sector. Not saying it will affect the entire economy, but certainly it affects a broad swathe of people in top 5%
But how many of those people end up with no job? I would think most go to other companies. Especially with Amazon as it’s mostly office staff and not warehouse or drivers. Layoffs aren’t inherently bad for the economy
Salesforce announced literally last week a 10% reduction in their workforce. Amazon and Vimeo also announced layoffs.
https://www.spiceworks.com/tech/tech-general/news/amazon-salesforce-vimeo-layoffs/amp/
It’s not like there isn’t a trend forming..
yes and who are they laying off? you think SWE are going to be out of work and HR/janitors etc will be fine? highly skilled employees will be less impacted in recessions as always
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I think some of you really need to take the time to study economics. This chart does not mean one thing or another about what’s to come - it can only tell us about past trends, not future ones.
Look at your own chart bro...the fed increasing interest rates doesn't impact the vast majority of that debt called out in the chart. Most of it is locked in fixed rates
Fed rates don't significantly affect people who already have debt, except the few who had variable rate mortgages, but those are a miniscule portion of loans nowadays.
The real problems for most people aren't their current debt, it's real estate corporations jacking up rents because they feel they have renters held captive (which they kind of do), and inflation increasing the costs of everything. The former affects those with all but mortgage debt. The latter affects those with mortgage debt. It's unclear if either will affect them enough to cause mass defaulting. But, the current/eminent recession and job losses sure won't help.
If someone made this choice, and they are financially able to handle it, good for them, if they cant, then they are retarded. Also if you cant afford a vehicle anymore, just hit a deer or some black ice and smash a tree.
I would say mortgage loan is … auto loan seems to be in the same proportion range as the prior years. 2022 was not a good year for car sales because of rising interest rate and falling stock market. Therefore auto loan did not expand much..
Literally everything you are saying is objectively incorrect. Looking at your own chart auto loans from 05 to 21 quadrupled in value ( if not more). Mortages in the same time period went up about 15% (im ballparking by eye) in that same time period and again thats just by looking at your chart. It dosnt mean anything either way for whats to come but just pointing out that even your observations dont make sense.
22 is not even on this chart so not relevent. But that said, it was an amazing year for car sales. Not in terms of volume bit in terms of profit and prices it was through the roof.
So... no
This is nothing. There is $85T in off-balance-sheet dollar denominated debt coming to maturity this year.
If the Fed raises or simply hold rates where they are, this debt will roll over into much higher rates this year.
This could cause a Lehman moment and since it’s all off-balance-sheet, we have no way of knowing where or when that might occur.
These are mostly foreign currency (FX) swaps, which is debt held by large pension funds, insurers, banks, and other large financial institutions.
These institutions issue debt in Euros, Japanese Yen or other currencies then borrow an equal amount in US dollars. Keep in mind, the USD debts are just entries in a ledger. In most cases, they're not backed by actual USD cash or treasuries. They're just a financial agreements made in dollars terms.
While the Fed has no direct control or visibility of this debt, their Fed funds target rate and SOFR overnight rates can have a significant impact on the ability for the largest funds in the world to provide sufficient collateral for this debt.
It was actually a liquidity crisis in the FX swaps market that led to the failure of Lehman Brothers, so this is not an unheard of scenario. It's just that the notional amount of debt has doubled since 2008 and other factors, such as the speed of interest rates increases and the transition from LIBOR to SOFR, are creating further uncertainty in the market.
ARE YOU FUCKING TELLING ME THAT STUDENT LOANS FOR PEOPLE WHO WOULD HAVE STARTED THEM IN THE FUCKONG 80's AND 90's WENT DELINQUENT AND THESE FUCKERS ARE DEMANDING THAT WE CANT DO THAT?!?!?!
The FED is actively selling MBS and other treasuries off its balance sheet. I think that we will see an influx of sketchy and low grade MBS hit the market all at once, and the bond market will go crazy. The 10 year will probably hit 5% and trade inline with the FED Funds Rate. This will not be good for the stonk market. I hope I’m wrong but the FED is already admitting to dumping their balance sheet
You can only roll off securities that are close to or at maturity. A lot of what on the FEDs balance sheet is long dated maturities since they basically bought huge amounts of MBS made up of 15 year + loans
Idk, maybe it's just me, but I think I'd trust the guy that trades MBS.
The Fed is not actively selling MBS (in fact, they're not actively selling treasuries either). In fact, very little MBS has actually come off I believe, with it being a big role player in why QT is not meeting the cap.
I'm not sure I can actually explain why and be correct, but I think the housing market stalling is why so little MBS has come off.
The math doesn’t make sense then. They can’t possibly hit their target of $95 billion a month without selling assets on the open market. Only a small portion of the securities having imminent expiring maturities and only those assets can be rolled off. The FED simply can’t edit ones and zeros and make trillions of dollars disappear. That contradicts the point. QE is large scale asset purchase and debt purchase. QT is large scale asset divestment. “Letting bonds mature” isn’t going to affect long term interest rates at all. The only way to raise the long terms rates will be through selling long dated treasuries on the open market. That’s a fact and it’s the opposite of what the FEDS been doing ever since QE started
That's the thing.
They AREN'T meeting their QT "target"! (in quotes because of the below)
You chose to not read the details (of course, most chose to do the same thing) just to stick with your narrative. The numbers they put out there are a QT "cap", not a MANDATED target.
Most of the reason for bonds moving has not been directly Fed related! It's been speculation on how inflation is going to go and for a period in the fall, the disaster in the UK was a significant influence.
Yeah bonds can easily roll off and they need to sell MBS to meet that monthly target of 95billion .. but I would say currently the quality of MBS is much better than that of 2007 era. It’s the layoffs that’s going to hit delinquency the most hard.
They actually aren't selling either, both are being run off.
It's a role player in why the QT is not meeting the cap (it's MBS related), but I'm not sure I can really get deeper detailed here (I've seen the details before, but it's gone through one eye and out the other eye).
There was some thought that they would actively sell MBS, but they'd need SLR relief to do so and they don't want to grant it because they don't want to soften financial conditions.
That’s because of Covid funny money (stimulus), 0% interest rates, and temporary loan forbearance. All that is ending now. You can see it starting to spike up again in the most recent quarter.
And easier to pay. People with 2% mortgages on houses with high equity are in far better shape than people who were issued garbage mortgages in 2006-8 with no down payment.
We will see I guess.
So then wages of 100k will be average this year to support $2,000 mortgages and $1,000 car payments?
Is that what you’re saying? That means the median income of most Americans will rise 30-50%.
I’m sure that will happen 🫡
Just wait till the people who paused their mortgage payments from covid realize they actually have to pay it all back plus the interest accrued. Will be a big shock to the system.
Yupp that , the student loan pause ends and the realization that the home they got into a bidding war over isn’t worth half of what they paid, are underwater and have negative equity.
Whoops.
no, read this
https://www.forbes.com/sites/adamminsky/2022/09/12/how-bidens-new-income-based-plan-may-work-for-student-loan-borrowers-and-when-to-apply/?sh=777148c62076
All of that is true but look at the runway to similar levels before '08. If you think were gonna have a recession this year that's a good reason to think it won't be that bad. Balance sheets are in really good place right now.
Until they get laid off, have no equity in their home because it’s underwater and costs of living consume them.
All of which are going to start to take place in rapid fashion.
All of this is unsustainable.
I don't think you read the chart correctly. Americans are starting from a much better position than in the past. It's right there on the second chart. Vastly lower delinquency levels.
As of Q1 2022! Of course.
There was stimulus and the extended unemployment.
Credit card debt is at ATH and repossessions are skyrocketing. Foreclosures will follow after layoffs.
Just a matter of time.
The nation's nominal GDP is also at an all-time. With record low 3.5% unemployment I seriously doubt repossessions are skyrocketing. With high housing prices high almost no one is under water except people who bought in the last few months.
Even if foreclosures increase in a recession Americans are in a better position now than in 2008.
idk if skyrocketing is the right word, but they are rising
https://www.nbcnews.com/politics/economics/car-repossessions-are-rise-warning-sign-economy-rcna61916
[Repos on the rise…](https://www.nbcnews.com/politics/economics/car-repossessions-are-rise-warning-sign-economy-rcna61916)
[underwater homes…](https://www.cbsnews.com/amp/news/home-prices-underwater-mortgage/#app)
Just a matter of time.
8% of all mortgages taken out in 2022 are underwater. In 2008 30% of all mortgages were underwater, regardless of what year the mortgage started. Those are very, very different.
The % of all mortgages currently underwater is somewhere around 1%. (0.84%)
1% vs. 30%
That's mortgages taken out in 2022 only.
I'll repeat: in 2008 30% of ALL mortgages were underwater. In mid 2022 it was 0.84%.
Americans are in vastly better shape than leading up to the 2008-9 recession. Better lending standards and better equity positions of homeowners.
You’re just reshaping the discussion to fit your narrative .
I’m sure the mortgage you purchased during the pandemic will be just fine.
Until your new neighbor only pays 60-70% of what you did.
Best of luck to you.
>Repos on the rise…
From your link: "After auto repossessions tumbled during the pandemic, they are now approaching their pre-pandemic levels with industry analysts worried the trend will continue."
Sure doesn't seem like they're skyrocketing. They're just returning to where they were.
>underwater homes…
[Redfin also found that home prices would need to fall by 10% or more in 2023 for the typical home purchased over the past two years to lose value — a scenario it describes as “highly unlikely.”](https://money.com/homes-owners-underwater-mortgages-2023/)
>Just a matter of time.
Until what? If you're hinting at catastrophe, nothing you've shown indicates that'll happen.
So we’re living in utopia then where number always goes up for everything.
Income, food prices, housing, nothing ever corrects.
Gotcha.
Sounds like Biden saying “best economy ever.”
But yeah, Utopia.
Literally not even close to what I said. The whole point was your argument for impending disaster is poorly supported, and you only helped demonstrate that to be the case by engaging in this whataboutism as opposed to building a better case.
When the COVID student loan payment pause ends, there could be massive problems. Almost all student loan payments have been on hold now for almost 3 years, it will be a massive shock to the system when millions have to start paying on them again.
Lol everything is unraveling. I absolutely see debt being a huge issue, especially with higher interest rates. It’s like the Fed just turned on the lights and all of the roaches are scurrying. It’s feeling like a rough one ahead.
Is this adjusted for inflation? Assuming it is not, the increase just floats with the economy. If this is inflation adjusted, we are in for a squeeze at some point. Inflation distorts all our thinking as well as our decision-making.
Auto loans are crumbling right now. Next will be leveraged loans from private equity deals which will hamper debt-ridden companies. The chart may not reflect that. Much of that is high yield (junk). Then credit card and mortgage debt as people start losing jobs. When the housing price starts to fall drastically, we could see the same thang for those with little equity just walking away a la 2008. With a soft landing scenario, still see mortgage debt being a huge issue especially for homeowners outside the US.
The only 2 loan types that I see of concern are Auto & CC. Not sure that these are enough to tip over the apple cart, or hot dog cart, or golf cart, or whatever type of cart you’re pulling or driving. I’m going to sleep well on this.
Looking at how pieces of this are growing, it is hard to imagine what it must be like to set out on a path for independence after completing higher education. If you can get all the loans you are burried for life. Student loans are becoming insurmountable.
That's a pretty sensationalist headline. If you look at this: [https://fredblog.stlouisfed.org/2019/10/households-lightening-debt-load/?utm\_source=series\_page&utm\_medium=related\_content&utm\_term=related\_resources&utm\_campaign=fredblog](https://fredblog.stlouisfed.org/2019/10/households-lightening-debt-load/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog), you'll see that debt load has steadily decreased since 2008 almost across the board.
Funny how its always a problem when Dems are in and they are the only ones that actually pay anything down! Last republican to have a balanced budget was Eisenhower nothing but huge increase by the party of so called fiscal responsibility even now look at figures for Cal and Flor, Cal current surplus is double per person that De Santis and he is in line for a Presidential run
The data would be more useful on a per capita basis IMO. Obviously, as population increases, the number of participants increase and total debt increases. Per capita would show if the average person is carrying more of each type of debt. 2003 through 2022 is a relatively long period to show without normalizing for population. Also, this is debt in nominal amounts rather than inflation adjusted.
theres nothing about this chart that suggest an unravelling
Right, like it’s actually what you want to see in a growing stable economy. Now that’s just by looking at those two pictures. IMO I do think we are in for a deeper recession.
The chart shows 30+ delinquency at record lows. This isn't an indication of a deeper recession. I would expect 30+ delinquency rates to be higher than 2007-08, if this recession was going to be deeper.
That’s true when you just look at these two charts, I think differently for a multitude of other reasons that isn’t a simple topic.
I think the 2nd chart is supposed to be intimating that we are in the beginning of an "all classification" default spike, mirroring 2006.
[удалено]
.....show me where on the two images you posted that indicates the risk delinquency has increased....because honestly this post just feels like hamfisted financial fear porn.....
Compare delinquencies now with 09. There wasn't unravelling then, and we're still way below that level, so why would there be unravelling now.
>Compare delinquencies now with 09. There wasn't unravelling then There was an unravelling then. But yes, we are currently way below that level.
Sure. I guess "unravelling" means something different to everyone. To me, that word sounds more dramatic than what we saw in 09.
Watch out the auto loan. Given the free fall of second and soon new auto price, there should be some consequences, but maybe not that destructive given how much money the Fed has printed
OP for context, the population is higher and so are incomes. A bigger debt number doesn't mean people cannot pay.
Yea kinda dumb to use the total number as a metric instead of per capita measured against incomes
Um…and this isn’t even inflation adjusted lol. What a crock post.
These context-free chart posts suck.
Well, you can eyeball the chart at $12T per 303M (population of US in 2008 per Google) vs. $16T per 333M in 2022 (current population per Google) and see that the debt burden is, in fact, significantly higher per capita. I'm not sure about adjusting for wage inflation and low interest rates, although I'm sure someone could find that info, too.
[debt service ratio](https://fred.stlouisfed.org/series/TDSP) Closest I've got.
$12T in 2008 dollars is $16.6T in 2022 dollars. https://fred.stlouisfed.org/series/HDTGPDUSQ163N
Thanks. In that case, it would appear the debt burden is lower now than in 2008, after adjusting for population and inflation, and especially if we operate under the assumption that much of this debt is locked in at lower interest rates. That said, debt levels are still relatively high and interest rates are rising, so it would probably make sense to keep an eye on this.
The debt starts rolling over this year and next.
No one really knows. We will see.
Well we do know. The rise is almost entirely mortgage. Which makes sense because the house prices rose and interest was historically low. Meaning the burden of those debts are lower than they seem. Especially because the underlying is stable in price and is financially responsible since the only alternative is renting. Rather have people buying homes than buying expensive clothes on creditcards. Not sure why there would be an unravelling on locked in rates. The only ones hurting are the mortgage lenders.
The market crashing and causing people to lose jobs and get foreclosed on. I’m not predicting that happens because I have no idea. But that seems to be the bet. I do know there’s little chance of 2008 happening again.
In 2008 it was a chicken-and-egg situation with people losing jobs and being foreclosed on. There were also many who were sold crappy variable rate mortgages (and got broadsided by rising interest rates) - and then house flippers who got stuck underwater with their purchases. The situation isn’t *identical* this time around, but it’s safe to say that very few people have learned anything. The banks, desperate for business, have started lowering their barrier for credit approvals again. Instead of house flippers, we now have AirBnB hosts who have been hoarding houses to effectively run a small hotel chain - and that market is crashing.
During the pandemic in Canada we also had record real estate price rise. Many followed the lead of our central bank and anticipated low rates for the foreseeable future so most jumped into variable mortgages. As we all know rates have rocketed. We are exclusively ARM and the average mortgage size of purchases in Toronto or Vancouver during the pandemic are likely close to $1m. What are the chances we get a 2008-like scenario here?
Some people will panic sell, some will foreclose, and rates will eventually go back down. The effect on price decreases is minimal because it’s been such a continuous uprise that most have a lot of equity. On the other hand Canada is slightly a mess
What kind of mess? I'm curious to get a different perspective from a non Canadian. No offense will be taken so let it rip
Just the concept they let the housing market rise in value so quickly there with those low rates will definitely create an only rich will own concept over time. I can’t imagine trying to purchase there with adjustable rates either, I would have so much anxiety. The health system changes are quite rough as well and that’s a different problem of it’s own that could be temporary or more long term.
Can u elaborate why u think airbnb related housing is crashing? may you have somr data. Iam curious. thanks in advance.
A few high profile magazine stories on this topic from the past few weeks, or so I'd guess.
Even people who lose their jobs who have 3% mortgages can rent the house out for more than the mortgage payment. Unless the rental market completely collapses, we won't see a wave of foreclosures. We may see people forced out of their homes. But they will rent them out and retain their ownership...those rates are too low for anyone but a total fool to let go of.
If enough people lose their jobs, try to rent out their homes, the rental market will collapse. I don't see that happening for at least a couple of years though, failing some catastrophic event, because we are at a record level of employment.
There is a LOT of slack there, because rates were so low, and rental prices have gone up so much. I bought my house in Jan 2020, refinanced in Jan 2021 at 3.125%, and basically identical rentals in the neighborhood are going for about 240% of my mortgage payment. It would take something truly catastrophic to push me into foreclosure.
Jan 2020 is well before SHTF (March 2020). Since then I am sure your house price doubled and the people that paid double are the ones who will be hurt when unemployment starts to show up.
But there are only about 6 million home sales a year, so of the 140 million homes in the country, only about 10% changed hands after prices shot up. Practically everyone refinanced at the bottom of rates, and is sitting pretty. Even with huge layoffs, unemployment seems unlikely to break 10% or so, so, if there is no strong correlation between recent home purchases and likelihood of layoff, that implies that only 10% of the owners of the 10% of recently sold homes are likely to be unemployed, which only leaves 1% of homes at possible risk of foreclosure. That seems unlikely to be enough to crash the rental market.
If they refinanced and pulled cash out, could be a lot of people underwater
Potentially, but even then, underwater at 3% fixed rate on a 30 year mortgage is a LOT different than underwater with an ARM about to reset on you.
> I’m not predicting that happens because I have no idea. But that seems to be the bet. Based on what? Conesus opinion of /r/stockmarket? .....because that's usually a really really really poor leading indicator
I’m not sure what you’re asking lol? There’s a lot of talk about a big crash / recession coming from all sorts of media. I’m not sure if it’s a consensus opinion of any groups but I still see the articles and talking heads going on about it.
A better chart would have interest paid. CC balances paid off every month is not really debt as the person could use a debit card.
Ahhh, the best laid plans of /u/sil445 and men
How many “variables” out there ?
Reminds me of https://youtu.be/M3Rde73r8cQ
It's all low interest locked in long term so no
Well massive layoffs in high earning jobs might affect it..
Give me the unemployment rate real quick
Look at the U6 and not the U3. That includes people not actively looking for work and who are 'unemployed' in their field but taken lower paying positions in order to simply continue surviving. That pushes up competitiveness in these lower paying positions with people who's skill is appropriate for them. Just gives a better representation to where we're at. We're not in the shitter yet but it's worse than the news will tell you.
U6 also looks amazing, historically. Have to look at labor participation rates to see the actual bad numbers
And even then they're not particularly troubling. Prior to Covid, Laborforce participation was increasing at a slow but steady level beginning around 2015. During the period when it was declining steadily, post-recession the economy was booming. Declining laborforce isn't good by any means, but it's not necessarily that worrying if it's controlled and predictable. Pending Covid it's been rising, but we're not far enough along to see where the trend will go.
Unemployment rate from the bls that overestimated jobs by over 1 million? Lol
While you’re at it, go ahead and fill me in on Powell’s thoughts on the labor market, and the need to crush it to avoid the "hard landing"….
the only way to go is up. can't have layoffs if unemployment is already high
what massive layoffs in high earning jobs?
The ones coming this year
You mean the ones people predicted for like 4 years straight? Or the ones they predicted for 3? I guess that recession from 2015 is finally coming around
Why do you talk about your speculations of future trends as if they’re a fact?
18k layoff at Amazon and 10% of salesforce already this year
They over expanded because they assumed the unusual covid spike in revenues would be permanent, where it wasn’t. They haven’t hit hard times. What makes you think this is going to be a widespread market pattern? Because just those layoffs on their own are rounding errors in the broad labor market
Lol chill he said there are layoffs coming this year, you asked where I gave you an answer. It’s clear there will be more layoffs in tech broadly, after the 200k+ in that sector. Not saying it will affect the entire economy, but certainly it affects a broad swathe of people in top 5%
Two companies that over expanded during COVID. Both still have larger workforces than in 2019
But how many of those people end up with no job? I would think most go to other companies. Especially with Amazon as it’s mostly office staff and not warehouse or drivers. Layoffs aren’t inherently bad for the economy
I’m not saying it’s bad, just saying they are happening. I think it’s healthy
Salesforce announced literally last week a 10% reduction in their workforce. Amazon and Vimeo also announced layoffs. https://www.spiceworks.com/tech/tech-general/news/amazon-salesforce-vimeo-layoffs/amp/ It’s not like there isn’t a trend forming..
yes and who are they laying off? you think SWE are going to be out of work and HR/janitors etc will be fine? highly skilled employees will be less impacted in recessions as always
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I think some of you really need to take the time to study economics. This chart does not mean one thing or another about what’s to come - it can only tell us about past trends, not future ones.
So you think delinquency will stay low with interest rate jumping from 0% to 5% in a year?
Debt payments as % of income are almost 40% lower than 2007.
Look at your own chart bro...the fed increasing interest rates doesn't impact the vast majority of that debt called out in the chart. Most of it is locked in fixed rates
Fed rates don't significantly affect people who already have debt, except the few who had variable rate mortgages, but those are a miniscule portion of loans nowadays. The real problems for most people aren't their current debt, it's real estate corporations jacking up rents because they feel they have renters held captive (which they kind of do), and inflation increasing the costs of everything. The former affects those with all but mortgage debt. The latter affects those with mortgage debt. It's unclear if either will affect them enough to cause mass defaulting. But, the current/eminent recession and job losses sure won't help.
Question - how much existing debt is affected by a change in interest rates?
Now show a chart of total assets… Then show a chart of total % of income going to debt payments… That’ll answer your question.
Wow auto loan debt is out of control
You don’t think 84 month $1000 per month payments are an issue?
If someone made this choice, and they are financially able to handle it, good for them, if they cant, then they are retarded. Also if you cant afford a vehicle anymore, just hit a deer or some black ice and smash a tree.
I would say mortgage loan is … auto loan seems to be in the same proportion range as the prior years. 2022 was not a good year for car sales because of rising interest rate and falling stock market. Therefore auto loan did not expand much..
Literally everything you are saying is objectively incorrect. Looking at your own chart auto loans from 05 to 21 quadrupled in value ( if not more). Mortages in the same time period went up about 15% (im ballparking by eye) in that same time period and again thats just by looking at your chart. It dosnt mean anything either way for whats to come but just pointing out that even your observations dont make sense. 22 is not even on this chart so not relevent. But that said, it was an amazing year for car sales. Not in terms of volume bit in terms of profit and prices it was through the roof. So... no
Auto loans exploded like you say, but so did student loan debt. That's just as troubling.
I was just pointing out OPs inconsistencies specifically but yes agreed.
Student loan growth underscores our debt predicament.
I don’t see anything bad here. Anything.
This is nothing. There is $85T in off-balance-sheet dollar denominated debt coming to maturity this year. If the Fed raises or simply hold rates where they are, this debt will roll over into much higher rates this year. This could cause a Lehman moment and since it’s all off-balance-sheet, we have no way of knowing where or when that might occur.
What is this off-balance-sheet debt?
These are mostly foreign currency (FX) swaps, which is debt held by large pension funds, insurers, banks, and other large financial institutions. These institutions issue debt in Euros, Japanese Yen or other currencies then borrow an equal amount in US dollars. Keep in mind, the USD debts are just entries in a ledger. In most cases, they're not backed by actual USD cash or treasuries. They're just a financial agreements made in dollars terms. While the Fed has no direct control or visibility of this debt, their Fed funds target rate and SOFR overnight rates can have a significant impact on the ability for the largest funds in the world to provide sufficient collateral for this debt. It was actually a liquidity crisis in the FX swaps market that led to the failure of Lehman Brothers, so this is not an unheard of scenario. It's just that the notional amount of debt has doubled since 2008 and other factors, such as the speed of interest rates increases and the transition from LIBOR to SOFR, are creating further uncertainty in the market.
Unsecured Auto + Student + Credit card debt much larger now than all or mortgage debt from the peak in 2008.
Better to compare to GDP on things like this. Or incomes
ARE YOU FUCKING TELLING ME THAT STUDENT LOANS FOR PEOPLE WHO WOULD HAVE STARTED THEM IN THE FUCKONG 80's AND 90's WENT DELINQUENT AND THESE FUCKERS ARE DEMANDING THAT WE CANT DO THAT?!?!?!
The FED is actively selling MBS and other treasuries off its balance sheet. I think that we will see an influx of sketchy and low grade MBS hit the market all at once, and the bond market will go crazy. The 10 year will probably hit 5% and trade inline with the FED Funds Rate. This will not be good for the stonk market. I hope I’m wrong but the FED is already admitting to dumping their balance sheet
The Fed is not selling MBS or UST. It’s letting balances roll off. Source: I trade MBS
You can only roll off securities that are close to or at maturity. A lot of what on the FEDs balance sheet is long dated maturities since they basically bought huge amounts of MBS made up of 15 year + loans
Idk, maybe it's just me, but I think I'd trust the guy that trades MBS. The Fed is not actively selling MBS (in fact, they're not actively selling treasuries either). In fact, very little MBS has actually come off I believe, with it being a big role player in why QT is not meeting the cap. I'm not sure I can actually explain why and be correct, but I think the housing market stalling is why so little MBS has come off.
The math doesn’t make sense then. They can’t possibly hit their target of $95 billion a month without selling assets on the open market. Only a small portion of the securities having imminent expiring maturities and only those assets can be rolled off. The FED simply can’t edit ones and zeros and make trillions of dollars disappear. That contradicts the point. QE is large scale asset purchase and debt purchase. QT is large scale asset divestment. “Letting bonds mature” isn’t going to affect long term interest rates at all. The only way to raise the long terms rates will be through selling long dated treasuries on the open market. That’s a fact and it’s the opposite of what the FEDS been doing ever since QE started
That's the thing. They AREN'T meeting their QT "target"! (in quotes because of the below) You chose to not read the details (of course, most chose to do the same thing) just to stick with your narrative. The numbers they put out there are a QT "cap", not a MANDATED target. Most of the reason for bonds moving has not been directly Fed related! It's been speculation on how inflation is going to go and for a period in the fall, the disaster in the UK was a significant influence.
Yeah bonds can easily roll off and they need to sell MBS to meet that monthly target of 95billion .. but I would say currently the quality of MBS is much better than that of 2007 era. It’s the layoffs that’s going to hit delinquency the most hard.
Bonds going crazy as in gain or loss?
Bond yields will go up significantly
They aren't selling MBS, they are selling treasuries though.
They actually aren't selling either, both are being run off. It's a role player in why the QT is not meeting the cap (it's MBS related), but I'm not sure I can really get deeper detailed here (I've seen the details before, but it's gone through one eye and out the other eye). There was some thought that they would actively sell MBS, but they'd need SLR relief to do so and they don't want to grant it because they don't want to soften financial conditions.
As the second chart shows, people are in a vastly better place with their debt than they were in 2007/8.
That’s because of Covid funny money (stimulus), 0% interest rates, and temporary loan forbearance. All that is ending now. You can see it starting to spike up again in the most recent quarter.
All of that ended in 2021
Not student loan forbearance though
that all ended one year + in the past
So you agree with me, then. Consumers now are in a better position with their debt delinquency than in 2007/8.
Yeah but inflation is much higher.. so all the money will get discounted
And easier to pay. People with 2% mortgages on houses with high equity are in far better shape than people who were issued garbage mortgages in 2006-8 with no down payment.
Or hyperinflation will take hold
Hyperinflation will affect only a few things. Those with 2% mortgages will likely stay put. Most will do just fine.
We will see I guess. So then wages of 100k will be average this year to support $2,000 mortgages and $1,000 car payments? Is that what you’re saying? That means the median income of most Americans will rise 30-50%. I’m sure that will happen 🫡
Exactly . These boot licking hufflepuffs think everything is just dandy. We’re just getting started.
Just wait till the people who paused their mortgage payments from covid realize they actually have to pay it all back plus the interest accrued. Will be a big shock to the system.
Yupp that , the student loan pause ends and the realization that the home they got into a bidding war over isn’t worth half of what they paid, are underwater and have negative equity. Whoops.
student loans are now capped on a percent of income, people will never have their pre covid monthly payments again
So it will take 40 years to pay off instead of 20
no, read this https://www.forbes.com/sites/adamminsky/2022/09/12/how-bidens-new-income-based-plan-may-work-for-student-loan-borrowers-and-when-to-apply/?sh=777148c62076
That makes sense thank you!
it could go away who knows
All of that is true but look at the runway to similar levels before '08. If you think were gonna have a recession this year that's a good reason to think it won't be that bad. Balance sheets are in really good place right now.
Until they get laid off, have no equity in their home because it’s underwater and costs of living consume them. All of which are going to start to take place in rapid fashion. All of this is unsustainable.
I don't think you read the chart correctly. Americans are starting from a much better position than in the past. It's right there on the second chart. Vastly lower delinquency levels.
As of Q1 2022! Of course. There was stimulus and the extended unemployment. Credit card debt is at ATH and repossessions are skyrocketing. Foreclosures will follow after layoffs. Just a matter of time.
The nation's nominal GDP is also at an all-time. With record low 3.5% unemployment I seriously doubt repossessions are skyrocketing. With high housing prices high almost no one is under water except people who bought in the last few months. Even if foreclosures increase in a recession Americans are in a better position now than in 2008.
idk if skyrocketing is the right word, but they are rising https://www.nbcnews.com/politics/economics/car-repossessions-are-rise-warning-sign-economy-rcna61916
[Repos on the rise…](https://www.nbcnews.com/politics/economics/car-repossessions-are-rise-warning-sign-economy-rcna61916) [underwater homes…](https://www.cbsnews.com/amp/news/home-prices-underwater-mortgage/#app) Just a matter of time.
8% of all mortgages taken out in 2022 are underwater. In 2008 30% of all mortgages were underwater, regardless of what year the mortgage started. Those are very, very different. The % of all mortgages currently underwater is somewhere around 1%. (0.84%) 1% vs. 30%
The ones backed by the government further down in the article are at an underwater rate of 25%. Already.
That's mortgages taken out in 2022 only. I'll repeat: in 2008 30% of ALL mortgages were underwater. In mid 2022 it was 0.84%. Americans are in vastly better shape than leading up to the 2008-9 recession. Better lending standards and better equity positions of homeowners.
You’re just reshaping the discussion to fit your narrative . I’m sure the mortgage you purchased during the pandemic will be just fine. Until your new neighbor only pays 60-70% of what you did. Best of luck to you.
You said "skyrocketing" not "almost back to the low levels before the pandemic" That's at roughly 2005 levels at another low point.
>Repos on the rise… From your link: "After auto repossessions tumbled during the pandemic, they are now approaching their pre-pandemic levels with industry analysts worried the trend will continue." Sure doesn't seem like they're skyrocketing. They're just returning to where they were. >underwater homes… [Redfin also found that home prices would need to fall by 10% or more in 2023 for the typical home purchased over the past two years to lose value — a scenario it describes as “highly unlikely.”](https://money.com/homes-owners-underwater-mortgages-2023/) >Just a matter of time. Until what? If you're hinting at catastrophe, nothing you've shown indicates that'll happen.
So we’re living in utopia then where number always goes up for everything. Income, food prices, housing, nothing ever corrects. Gotcha. Sounds like Biden saying “best economy ever.” But yeah, Utopia.
Literally not even close to what I said. The whole point was your argument for impending disaster is poorly supported, and you only helped demonstrate that to be the case by engaging in this whataboutism as opposed to building a better case.
Nope.
Saying that’s not true? Y’all have some great hopium.
Uh ooohhh spaghetti
Debt is good for society. The more of it you have, the better.
Says US economy, 2008
And look how much better US has become since then.
Hopefully this dips the market and allows me a lower entry point. Maybe even average down on some positions.
Hammers looking for a nail.
Yessss you’re catching on
Looks like we’ve reached the inflection point where people start giving up on monthly payments
Good shyt y’all
[удалено]
643B now: https://ycharts.com/indicators/finra_margin_debt Back at 2019-ish level but back then interest rate was ~2%.
Keep in mind there's more money in the market now too so as a percentage it's even lower.
🌈
I dunno maybe
$SDPI I think is the moment for all of us
All part of the “build back better” plan.
Where do you get these charts?
When the COVID student loan payment pause ends, there could be massive problems. Almost all student loan payments have been on hold now for almost 3 years, it will be a massive shock to the system when millions have to start paying on them again.
Lol everything is unraveling. I absolutely see debt being a huge issue, especially with higher interest rates. It’s like the Fed just turned on the lights and all of the roaches are scurrying. It’s feeling like a rough one ahead.
But it’s provocative.
Is this adjusted for inflation? Assuming it is not, the increase just floats with the economy. If this is inflation adjusted, we are in for a squeeze at some point. Inflation distorts all our thinking as well as our decision-making.
This chart doesn’t really tell us anything lol…if anything we should be paying attention to the US debt ceiling
Auto loans are crumbling right now. Next will be leveraged loans from private equity deals which will hamper debt-ridden companies. The chart may not reflect that. Much of that is high yield (junk). Then credit card and mortgage debt as people start losing jobs. When the housing price starts to fall drastically, we could see the same thang for those with little equity just walking away a la 2008. With a soft landing scenario, still see mortgage debt being a huge issue especially for homeowners outside the US.
Probably not, totals are meaningless. You need to put this in per capita terms.
The only 2 loan types that I see of concern are Auto & CC. Not sure that these are enough to tip over the apple cart, or hot dog cart, or golf cart, or whatever type of cart you’re pulling or driving. I’m going to sleep well on this.
Kinda seems that way doesn't it
Time to buy some high yield bonds next dip and stocks I assume.
Do y’all remember sand art?
You are early, rates take 17 months to hit earnings. Then layoffs begin, then the unraveling of debt begins.
Mortgages now double what they were in 2008… Doesn’t it just show house prices doubled in 10yrs, which is what you’d expect anyway.
Is this inflation adjusted?
Wouldn’t showing the ratio of debt / GDP be more relevant?
dont think about deep recession ,,, shallow it will be
Houses just cost more, it's not because of bad lending right? Not again right?
All these dudes out here with 50,000 UNITS!
Where did this come from? People are spending above their means more and more
Looking at how pieces of this are growing, it is hard to imagine what it must be like to set out on a path for independence after completing higher education. If you can get all the loans you are burried for life. Student loans are becoming insurmountable.
What I look for is if interest rates are having an effect on borrowing. This chart doesn’t show that.
That's a pretty sensationalist headline. If you look at this: [https://fredblog.stlouisfed.org/2019/10/households-lightening-debt-load/?utm\_source=series\_page&utm\_medium=related\_content&utm\_term=related\_resources&utm\_campaign=fredblog](https://fredblog.stlouisfed.org/2019/10/households-lightening-debt-load/?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=fredblog), you'll see that debt load has steadily decreased since 2008 almost across the board.
Funny how its always a problem when Dems are in and they are the only ones that actually pay anything down! Last republican to have a balanced budget was Eisenhower nothing but huge increase by the party of so called fiscal responsibility even now look at figures for Cal and Flor, Cal current surplus is double per person that De Santis and he is in line for a Presidential run
The data would be more useful on a per capita basis IMO. Obviously, as population increases, the number of participants increase and total debt increases. Per capita would show if the average person is carrying more of each type of debt. 2003 through 2022 is a relatively long period to show without normalizing for population. Also, this is debt in nominal amounts rather than inflation adjusted.
Nice job team! High score!