Over the past decade, the U.S. auto industry has significantly boosted sales by pushing people to take on auto loans they cannot actually afford. That’s been particularly true for auto loans made to consumers with subprime credit. In recent years, these loans have been accounting for an increasingly larger percentage of the market. But when you make loans to people that should not be getting them, at some point, a lot of those loans are going to start to go bad, and that is exactly what is happening now. At the same time, automakers and dealers are starting to panic as sales have begun to fall and production continues to be stalled by an ongoing shortage of semiconductors, raw materials, and workers. If you remember the last recession, then you probably recall how horrible things became for the auto sector. Now that we’re entering another downturn, conditions are set to be even worse. Back in the old days, the auto industry was very resilient due to the economic strength of average U.S. consumers.
But some of the long-term economic trends that our leaders in Washington D.C. have consistently ignored led the American middle class to be systematically hollowed out, and now the purchasing power of the average American has been steadily dropping as a consequence of rampant inflation. We have become a nation of economic extremes. In the past two years, the number of millionaires exploded, and now we have more people in the top 5% of income earners than ever before. Meanwhile, poverty rates are rising at an alarming pace.
Many communities across the nation are witnessing a massive surge in the number of people living on the streets. In fact, as a recent Gallup survey showed, an all-time record high percentage of Americans is extremely worried about hunger and homelessness these days. “Over the past two years, an average of 67% of lower-income U.S. adults, up from 51% from 2019, have worried “a great deal” about the problem of hunger and homelessness in the country. Concern has also increased among middle- and upper-income Americans,” the report highlights.
Those who are financially secure and have a cushion to fall back on may not be paying attention to the country’s rising food and housing insecurity. But for those who are just scraping by from month to month, having enough food and a place to sleep at night are top priorities. As Gallup noted, “U.S. households at all income levels are expressing rising concern about soaring food inflation and declining housing affordability. That is the top worry among lower-income Americans, who are most likely to struggle to pay for adequate food and housing.”
In addition to the woes of the auto industry, the retail industry has just gone through the worst wave of store closings in modern American history, pension funds have started melting down all over the nation, and stocks are experiencing a crash of epic proportions. Unfortunately, most people are not paying attention to the warning signs. These same things happened just before the devastating financial crisis of 2008. All evidence that a huge meltdown was about to occur where there. Many experts repeatedly argued that a collapse could be averted if action was taken sooner. But given that it was a slow-motion crash, most people dismissed the alerts and let their guards down. Then, the fall of 2008 arrived and so did a day of reckoning. For that reason, today, we compiled facts and statistics that expose the decline of the U.S. auto industry.