Subprime Auto Loan Delinquencies And PMIs Are Flashing Warning Signs For The US Economy

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1) US Subprime Auto Delinquency Index

"Delinquencies on subprime auto loans packaged into bonds rose in January to 4.7 percent, a level not seen since 2010, according to data from Wells Fargo & Co.

Rising delinquencies come as a warning sign that more loans may end up in default down the road, said John McElravey, an analyst at the bank. What may be most troubling, however, is that the default rate is already climbing, up to 12.3 percent in January from 11.3 the prior month. That is the highest rate since 2010, the data show." (Bloomberg.com, 2/23/2016)


2) Markit's US Manufacturing and Services Flash PMIs

"Markit’s PMI survey data show a significant risk of the US economy falling into contraction in the first quarter. The flash PMI for February shows business activity stagnating as growth slowed for a third successive month. Slumping business confidence and an increased downturn in order book backlogs suggest there’s worse to come.

The composite Output Index from the manufacturing and services PMI surveys sank from 53.2 in January to 50.1 in February, according to the ‘flash’ releases, which are based on approximately 85% of usual monthly replies.

With the exception of the government shutdown in October 2013, the February reading was the worse since the recession. Business activity in services fell for the first time since the shutdown, accompanying a marked slowdown to near-stagnation in manufacturing." (Markit Economics, 2/24/2016)

(Source: Markit Economics)

(Source: Markit Economics)

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