What I Learned This Week

Workers are suffering even before mass layoffs begin. A crippling collapse in consumer spending is coming.

In WILTW October 10, 2019, we warned that the health of the U.S. consumer is far more precarious than most recognize. The situation was escalating even before the COVID-19 outbreak. In 4Q19, prime and subprime auto delinquencies that are 90 or more days past due surged by 15.5% to a record $66 billion. Meanwhile, the credit card delinquency rate at small banks—the roughly 4,500 banks that largely cater to lower-income households—hit 7.05%, the highest ever in data going back to 1980. As of the end of last year, total consumer debt had surpassed $14 trillion for the first time ever, according to the Federal Reserve Bank of New York. Now, COVID-19 is set to expose America’s greatest economic…

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