Prior to each of the past three recessions, labor underutilization bottomed between 6.7% and 7.9%. During the COVID-19 pandemic it initially spiked to 22.8% and remains at 18%, as of June 2020. What this means is nearly a fifth of the civilian labor force are either unemployed, stuck in a position where their skills aren’t being used properly, or have been forced into part-time work. This can lead to an army of discouraged workers and may negatively impact the operating efficiency of businesses. It’s going to take years to whittle this underutilization rate back to a “normal” level.
Auto loan delinquencies are a house of cards
A third economic indicator that suggests the stock market is in big trouble is auto loan delinquencies.
What you’re probably thinking is that I’m going to harp on rising loan delinquencies tied to the COVID-19 pandemic; and you’re partially correct. The real issue, though, is that auto loan delinquencies have been rising since 2012, long before the coronavirus turned our world upside down.
According to data supplied by the New York Federal Reserve, auto loan delinquencies that were at least 90 days in arrears hit an all-time high during the fourth quarter of 2018, at least based on the New York Fed’s 19 years of recordkeeping. Meanwhile, the American Bankers Association pegged auto loan delinquencies at an eight-year high, as of the third quarter of 2019. Your preferred source may vary a bit, but the data all tells the same story: Car owners aren’t paying their bills on-time, if at all.