Announcer:
4 Your Money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by John Nelson, financial planner at NelsonCorp Wealth Management. Welcome back, John.
John Nelson:
Thank you for having me, Brandy.
Brandy Auterson-Hurst:
So we hear a lot about the consumer holding up well, but are there any cracks forming under the surface that concern you?
John Nelson:
Yeah, I’d say the economic data broadly speaking has been mostly okay, but as we dig a little deeper, there are some areas seeing stress a bit more than they have been. That’s the graphic I have with me today. It’s actually focused on auto loans. So this is a chart from the Federal Reserve that tracks the percentage of auto loans that are 90 days or more behind. So these are not those that have missed say one payment, these are behind a bit.
And what we’re seeing here is honestly some of the highest rates that we’ve seen since the 2008 financial crisis. So this is a bit of a concern area for us. We went through COVID, we saw supply chain issues, we’re seeing vehicles at some of their highest levels they’ve ever been, which has translated into higher than normal auto loans. And when things were good, we saw households being able to maybe handle that, but as soon as things have tightened up or there’s been a change in someone’s life, these are some of the areas that start showing.
Brandy Auterson-Hurst:
Okay. So what does this mean for investors? Should this be a red flag?
John Nelson:
I’d say more of a yellow flag from our standpoint at this point. Auto loans themself are not going to sink the entire economy or put things into a total tailspin. But right now historically this has showed up at auto loans before we’re seeing it in credit cards or mortgages, things of that nature. So this is an area that we’re watching closely for our clients, not an area of panic, but an area of focus and something we’re going to be watching closely.
Brandy Auterson-Hurst:
All right, John. As always, thanks for joining us.
John Nelson:
Thank you, Brandy.
Past performance is no guarantee of future results. Investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal.
Indices mentioned are unmanaged and cannot be invested into directly.
This video includes a paid appearance.