Signs of financial stress still are present. The persistent interest rate increases by the Federal Reserve and record high gas prices in the third quarter provided a one-two punch that continued to inflict pain on personal budgets.
She is so smart, it's scary. She's very much a theoretician, but it's always directed toward what's practical and possible.
Gas prices don't look like they are coming down any time soon. Today, it costs $500 more than it did last year to operate a car. That's a whole lot of money.
It may be many months before its impact is reflected in the delinquency picture.
The rise in auto and other consumer loan delinquencies reflects the avalanche of layoffs over the past year and a half. Until job growth gains upward momentum, relatively high levels of delinquencies will remain.
The industry is very sensitive to the fact that delinquencies have risen over the last two years. They have already taken steps to tighten underwriting standards -- to stop solicitations to risky customers.
My concern is many people are having financial difficulties. Personal savings rates are down. There is less of a buffer to fall back on.
Continued strong economic growth and falling gas prices in the fourth quarter leaves me hopeful that delinquencies will continue to fall.
What the delinquencies tell us is that there are more people who are under financial stress. The rise in energy prices is sucking up much more of households' budgets than they ever did.
With job growth strong over the last year and gas prices easing by year-end, the delinquency picture has brightened considerably.
