Tame inflation in US reflects pressure on household budgets
Stubbornly weak auto sales come despite the average age of cars on the road reaching an all-time high
US consumer prices rose just 0.1% in September, rather than the consensus forecast of 0.2%, mainly because used car and truck prices dropped by 3% during the month.
US auto sales have been soggy despite the fact that the average age of American cars on the road is 11.6 years, the highest in history. There is residual demand for cars, but many households can’t finance a purchase.
According to Fitch (see chart below), the delinquency rate for subprime auto loans is higher today than it was during the 2008-2009 financial crisis. The Federal Reserve reports an overall delinquency rate for auto loans of 4.17%, up from a low of 3.1% in September 2014, but lower than the 5.27% peak at the end of 2010.