The economy is currently in a critical state, despite the efforts of the current administration to downplay it. In July, severe mortgage delinquencies increased 55 percent over pre-pandemic levels. Meanwhile, foreclosures grew 12 percent in August from July 2022 and increased 187 percent from 2021, according to data from ATTOM. To make matters worse, foreclosure filings have continued to rise each month since this summer. Additionally, 32 percent of American consumers are having trouble paying their bills. Furthermore, the growth in real average hourly earning isn’t keeping up with inflation, pushing households to borrow more.
The Daily Mail points out that US household debt jumped to $16.5 trillion in the third quarter. This represents an 8.3 percent growth, which is the fastest rise since 2008. “Soaring inflation has pushed many Americans to tap lines of credit as they struggle to afford high car prices, more expensive homes and elevated gasoline prices, the report noted,” says the Daily Mail.
It goes without saying that this severe economic condition is pushing many Americans to default on their loans, which again has dire repercussions for both the borrower and the economy. Young adults are especially vulnerable to risky loan defaults.
“Now more than ever, young adults are defaulting on auto loans at an alarming rate,” says Automoblog. The digital publication points toward an NBC News article, which highlights that “Gen Z and millennials default on auto loans at far greater rates than before the pandemic.” According to NBC News, TransUnion data shows that these two demographic groups currently have auto loan default rates that are much higher than their pre-pandemic levels.