America has had a rocky recovery from the 2007-08 financial crisis, but one group of Americans has done quite well: car dealers. Even as job and wage growth have stagnated, auto sales have uncoupled themselves from those traditional economic drivers to become one of the few sources of strength in the macroeconomic picture.
As the economists Amir Sufi and Atif Mian point out in their new book “House of Debt,” one of the big factors supporting overall retail spending in the U.S. since 2008 has been the expansion of auto credit. Sufi and Mian don’t celebrate this fact — they rightly see it as a symptom of broader secular stagnation in the U.S. economy. Indeed, a few recent statistics demonstrate the very precarious underpinnings of the auto industry’s prosperity:
The average auto-loan term has increased every year since 2010, reaching 66 months in the first quarter of this year, according to Experian Automotive. In the same period, loans with terms of 73 to 84 months grew 28 percent, while loans with terms from 25 to 72 months actually fell.
Tom McParland has more.