The US central bank cut its policy rate on Wednesday, and US mortgage rates rose.
Layoffs are surging, and loan delinquencies are driving a repo boom not seen since the 2009 recession. See, We Spent the Night Shift With the Repo Man, Who Is Busier Than Ever:
An estimated 1.73 million vehicles were repossessed last year, the most since recession-wracked 2009, according to automotive-service business Cox Automotive. There are signs the surge continues: This year’s repo volume at Cox’s Manheim auctions unit was up 12% through the end of September compared with the same period last year.
“It’s like history repeating itself,” said Detroit repossessor George Badeen, president of Allied Finance Adjusters, a trade group. Pandemic-era consumer protections left the repossession industry idling. Now, he said, companies are “making money because of the volume, it’s so big. You’re in a target-rich environment.”
The University of Michigan Consumer Sentiment Survey (below since 1975) is registering the gloomiest outlook since the pandemic and 2008, before that (shown below courtesy of Rosenberg Research).
Analysis finds that 82% of Americans live in a region experiencing economic contraction, the worst since the 2020 pandemic and the 2008 Great Financial Crisis (shown below since 2006).
The housing market is dumping because it needs humans with sufficient incomes to buy and rent. Artificial Intelligence (AI) doesn’t need the homes, consumer goods or services that drive 70% of economic growth.
Forty-one companies in the AI space now make up nearly half (47%) of the S&P 500 market value–a new record (below since 2022, courtesy of Jim Bianco). Our collective chips are increasingly on this bet.
We know that AI is costing a fortune, but how will it pay our bills?