As if I need to make another comment about a, or multiple bubbles, but something has to give and here it's of course the consumer. New and used car prices are at all-time highs (nominal it sounds like, but tell that to someone whose wages haven't kept pace (i.e., almost everyone)). Housing prices are at all-time highs (in terms of price:income so no qualifier needed there). Tariffs are not being 100% eaten by the producers (duh), nor by the importers (double duh), and so the consumer is being hit by those. Health care costs are about to rise materially as we flip to 2026 for large swaths (all?) of the US population. Any tax relief seen by the average consumer is likely not even close to enough to counterbalance all the increased prices/costs.
HN is fond of saying that the only thing propping up the US economy at this point is AI investment (not informed enough to know if that's actually true, but outside of equity prices it sure seems like everything else is blinking "this economy sucks.").
So when will the music stop? Seems like it should've been "yesterday," but what's the argument for it to continue playing for the foreseeable future? The great wealth transfer? AI efficiency/productivity gains (without the vast elimination of jobs)? Something else?
On paper, nothing will happen. The wealthy in America will continue to get wealthier. Real estate and stocks will soar in value.
In reality, the dollar's true value will plummet. The FED is starting to lower interest rates again. We are likely going to undergo brutal inflation.
Crashing the economy is obviously very politically unpopular. The left/right will do whatever they can to keep this charade up, even if it means dooming the working class and throwing them some kind of bone to make them think they're ok.
The COVID pandemic was a good example of this. The working class got thrown a $2,000 check while there was billions given to bail out businesses/lots of fraud. Not a lot of people cared because hey, we got a $2k check... Even though that $2k check was not even close to maintaining their relative wealth pre-pandemic due to all of the government's inflationary measures.
There won't be a recession, it won't happen on paper. But the middle/working class will continue to be squeezed. And there will be programs to "rescue us." Maybe it's low cost home programs, maybe it's community college, I'm not sure. But I am sure it will never truly benefit the working/middle class, it'll just be a token to keep them from fully dying.
The value of the dollar has already plummeted, 10% or so this year. It's expected that 2026 will have an equal dollar devaluation. This is the best-possible interpretation of the goals of this administration, the so-called Mar-a-Lago Accord that is somehow supposed to help some part of the economy. It's unclear who or how, to me.
>The COVID pandemic was a good example of this. The working class got thrown a $2,000 check while there was billions given to bail out businesses/lots of fraud.
A lot of people were paid more to not work during COVID restrictions than they earned before or after. $653 billion in federal funds for unemployment programs.
People were getting $600 per week from the feds for a while, then $300/week. Not a single $2000 check, $2400 per month. About the bottom 25 percentile were brought up to 25th percentile income.
>Crashing the economy is obviously very politically unpopular.
But not something one worries or cares about if one doesn't worry about having to be elected and/or is willing to use the military to suppress dissent...
So tanking the economy is a way to keep and maintain power...
> In reality, the dollar's true value will plummet.
It already has. It's down ~12% vs the EUR. It's even down 4% vs CAD, and Canada's on the front line of having its economy destroyed by Trumponomics. When the global markets have more confidence in the Canadian dollar than the American one, good luck...
We've got an insane bubble right now. Quantum computing stocks are valued at $50b market cap with 0 revenue and no substantial finished products. Just research.
Remember when "unicorn" companies were a big deal. Billion was significant amount of valuation and money. Lately it really feels like billion is pretty much nothing anymore. There has been inflation, but not that much to really make billion to be small sum.
Hey now, you can't say they don't have any product. We got a machine which can factor number 15 now. (with a preparation time for this calculation of only a few month) Isn't that amazing? We will be breaking RSA2048 any day now. Let's invest a few hundred billions into changing encryption everywhere! /s
>So when will the music stop? Seems like it should've been "yesterday," but what's the argument for it to continue playing for the foreseeable future? The great wealth transfer? AI efficiency/productivity gains (without the vast elimination of jobs)? Something else?
They seem to have figured out that you can just simply stop caring about the needs of 90% of your population if you systematically withhold any wealth from them and concentrate it to the 10%. The plan it seems is that the economy will increasingly be driven entirely by the upper middle class and above (who are all doing better now than they ever have in history), while the rest of us are left to rot and serve their drinks and clean their homes. The future for the average North American is starting to look a lot like our southern counterparts, where the wealthy elites in the cities rule over an underclass of destitute poverty everywhere else.
The economy is a lie. There is no the singular, hive mind economy. There are several segments and it's growing ever lopsided and moving K-shaped. The so-called "precariat" are hurting very badly. It doesn't matter what sort of imaginary, incestuous valuations NVIDIA et. al. attain because it doesn't trickle down in any measurable fashion. There is an pervasive profit-price spiral of necessities is a huge contributor of ongoing and deepening inflation. And the random tariffs / punitive federal sales taxes are yet another inflationary policy. The ultra rich can and will deny technological un(der)employment is happening until the pitchforks come out, and then blame the poor for being lazy/stupid/slow/unfortunate/antifa/whatever.
we learned our lessons from 2008 and 2020. my random thoughts
1) money has nowhere else go for now
2) great wealth transfer = really doesn't matter as long as the super rich can keep inflating their wealth faster than us peons. if you are above that curve just stay ahead of it at all costs.
3) prolonged pain can be extended indefinitely for most people by keeping them perpetual renters / extending loan terms.
4) all else fails print more money and i guess when it all does collapse doesn't matter, retreat to X country or bunker (lol)
> New and used car prices are at all-time highs (nominal it sounds like
Well, yes, nominal. But no, not really. Cars (and really this isn't surprising) have been getting steadily more affordable over time. They represent about half the fraction of consumer income that they did in the 80's. AS ALWAYS, please just go to FRED to ask these questions before announcing incorrect answers on the internet. New car price[1] expressed as a fraction of median income:
It's an extremely inconvenient situation that Americans find themselves in, a sort of self-perpetuating cycle of car dependency that they reinforce because alternatives require far too much investment to make worthwhile.
I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot more free in many ways. Places are more accessible not less.
I can't imagine being on the bottom rung of society and having yet another awkward expense, especially because you become unreliable if you don't properly invest in the maintenance of the thing. Which might cause you to lose your income altogether.
It sucks that you need to own a car to get anywhere in most of the US. When my wife and I moved to Southern California from Chicago, we had a single car and tried to make that work for a while, but it was just not doable. We have a grocery store 2 miles away, but any other services are further than walking distance (and even the grocery store requires walking on the shoulder of a busy arterial road at a couple points. I used to bike everywhere in Chicago, but doing so here is too risky).
That said, the problems of car loans are far beyond that - From the article: " The average monthly repayment now stands at more than $750.". That's nuts! I make a solid upper middle-class income, and I can't imagine spending that much on car financing, regardless of the loan length. When we needed a second car, we bought a 6-year-old Volvo station wagon in good condition, it it's still serving us well. Many of my neighbors, who make about half what I do, think we're poor because of it.
Exactly. This is going to come off as incredibly privileged, but I'm not a huge fan of car loans. In fact, I'm not a huge fan of leveraging to afford any asset unless it's appreciating in value or generating income. I buy and drive old, nearly junker cars because I can't afford a $40K new car. I can "afford" the monthly payments on a $40K car, but it's just a terrible financial idea. Totally nutty. A $750 monthly payment (I don't even want to know the term) for something that is losing value every day is absolutely bonkers.
The amount of debt Americans routinely and causally take on is honestly ridiculous.
Our solution to this was two cars, with one being a tiny well used EV (2015 Fiat 500E) where the range boils down to "dont leave town". Its a fantastic city car. 50% to full is about 3 hour on a 120v wall charger, and that's enough juice to run around our town for a ~week for all kinds of errands.
The other car is a 2023 Leaf with the extended range trim, which is sufficient to get us all around the PNW, although I would hesitate to take it east of the Cacades.
It doesn’t take that much to for huge numbers of people to be able to transfer to car free existence. Zoning laws inside cities do a amazing amount to force cars on millions of Americans.
Car free access to existing transit hubs like metro stations is often horrible and not particularly expensive to improve.
Cities could create bus and bike lanes literally overnight. Load up a truck with concrete parking curbs and cones and drop them. No one is going to bike until the infrastructure makes it safe and convenient. Like safe enough to let a kid or 65 year old woman bike.
We just choose to continue subsidizing a triangle of car dependency. The government finances toll-free roads, mandates parking minimums, and enforces restrictive zoning. Businesses and real estate consumers pick up the tab on the real cost of free parking (higher rents and mortgages, parking garage construction costs). Drivers pour money into car loans, insurance, maintenance, and fuel.
This is an extremely privileged viewpoint. Even in Tokyo, people in the bottom half of the income distribution do not live close enough to popular transit lines to be as mobile as someone with a beater car in Dallas. They spend a lot more time commuting (and they can’t “just do some work on the train” because they have real jobs). Even in Tokyo, their commutes are crowded, they’re subject to the weather.
Being tied to transit lines—again, because even in Tokyo transit isn’t as convenient as point-to-point car travel—limits where people can look for jobs. That makes it a poverty trap because people can’t easily find jobs in different areas. And it makes having a family and kids much more logistically complicated. The most transit-dependent cities have abysmal birth rates.
It's only privileged because I'm living in a city that has actively prioritised other modes of transport.
I invite you to compare Orlando and Malmo.
If you have the opportunity to visit both, I would recommend it. They have the same population size (actually, Malmo has more people in it, but, close enough) yet in one it's impossible to get across the street without a car, even to go to the grocery store, and the other has entire portions of the city where cars aren't even able to go. -- Yet everyone manages to get around, and most people would consider it very convenient to do so.
Isn't America literally the country with longest average and median commutes to work? Like, that was always an American thing - the long commute.
Also, you cant do work in car either. You have to drive and actually pay attention. You cant (or should not) just listen to podcast or loosing yourself in the music. You dont get health benefits of walking a bit or of popping int the store on the way to buy food quickly.
My point here is that if public transport and city are semi reasonably organized, the car has to be actually seriously faster to be worth it.
That beater car in Dallas is also a financial millstone around its owners neck, and odds are, he's already living hand to mouth, and has zero redundancy for it.
If that weren't so often the case, people wouldn't lose their shit whenever gas goes up 50 cents/gallon.
I'm glad you have that opportunity too, but purely on the financials it's probably not so much of a win when you consider the heightened cost of everything (housing in particular) in a city, right?
Cities are artificially expensive becuase we ban them in nearly every location in the US, and ban new housing in cities.
It would have been an easy fix 10+ years ago, but as the housing crisis got worse and the working class was priced out, building got a lot more expensive and we have a huge labor crisis in addition to the regulatory crisis.
All solvable, but the political establishment and the political power base (homeowners and landlords) are dead set against solving it.
Depends when you got into it. If you're an older gen, you got into that city early and are likely unburdened by high dwelling costs - instead, you've got a windfall of appreciation ahead of you.
Reality is, outside of housing, city life is generally cheaper because it's much more accessible and the tax base is better suited to covering those expenses. So, older generations get the best of all worlds, per usual.
I live in Malmö which is across the bridge from Copenhagen.
It's not comparable to the US in terms of Salary, but if I compare to the same size City in the UK (Coventry), it's not more expensive to live here than there. Coventry has a decent amount of car dependency for its size.
If we're comparing to a US City, I guess Orlando is pretty close (Orlando has a lower population than Malmö), but home prices are higher. However, there are only larger houses available making the comparison a bit squiff.
You don’t have to be in a large or even a medium sized city for car dependency to be alleviated. There’s a not just bikes video about this exact thing.
Housing and transportation should be considered a single budget category. If you can get rid of a second car but pay $500/mo more in rent it could be a wash.
For lots of America alternatives don't take that much investment. Creating a safe bike network would be relatively cheap and is feasible in large swaths of suburbs.
Due to the aforementioned car dependence: points of interest are further apart from each other than in other cities with solid cycling infrastructure (in Europe for example).
Enormous car-lots several times larger than the buildings that they serve for example, sprawling 6-lane roads that take 20s to clear a junction on a slow moving bicycle, these things contribute to it being infeasible for more poeple.
Connecting the bike lanes is not a problem, though people will fight it tooth and nail because they wan't all infrastructure spending to go to cars... hence, reinforcing the issue, because when all you have is a hammer...
> if you don't properly invest in the maintenance of the thing
For me, it's not the money that's annoying (though of course I'm not pleased by the bills every once in a while). It's the amount of time it takes to keep a car maintained! Seems like just yesterday I took a whole day remote to sit at the mechanics shop for a tire change, but now I have to do the same for an oil change! For this precise reason I end up doing a lot of maintenance late.
It’s honestly becoming a national subculture. Being a “burnout”. In tech burnout means you’re exhausted on working on things. In America “a burnout” is someone so deeply in debt they don’t even try to really pay it off, they just ignore the debt and spend money on cheap thrills when they can. Obviously not something that you advertise about yourself, but go to any bar in rural south and they know what am talking about.
As bad as the debt situation is in the US there’s not much a collection agency can do to force you to pay relatively petty sums under 100,000 they will just harass you basically.
The Roman proverb goes “The begger laughs in the face of the bandit” so burnouts spread money before it can be taken from them, then turn around and beg for more. A person who’s established this mentality, the exact amount they owe is the least of there problems.
Being on the bottom rungs is actually a lot cheaper than "HN style" car ownership. Nobody expects your shitbox to be legal, or have compliant papers all the time. You're blue collar so you know people who wrench and trade favors here and there. Boss expects you to be late a few times a month.
There's a "welfare cliff" when you try to get into a "must have reliable transportation" job though
Lower end jobs tend to be unforgiving on not planting your butt in seat at the scheduled time. I find the higher end your job the less BS you are forced to endure. e.g. No drug tests, no doctor's note to justify sick leave. If there's a layoff there's severance. Flex time.
There are some accommodations for poor drivers. Politicians loath to raise fuel tax. This shifts costs of roads from drivers onto general taxpayers. Car insurance limits are the same as in the 1970s. This shifts cost of accidents from poor drivers onto accident victims who are not fully compensated. Emissions testing and safety testing is either not done at all or waived for drivers who claim hardship.
Converting away from cars costs almost nothing compared to continuing cars. The project to put California route 37 above water near the Sonoma-Marin County line is going to cost $10 billion without adding any capacity. That's one tiny little project. And people don't even want to attach a number to the external cost of pollution.
https://fred.stlouisfed.org/series/DRSFRMACBS home loans delinquencies look amazing right now, to the surprise of noone, since everyone is sitting happy having locked in their 3% rates a few years back.
My understanding is that Tricolor went under due to systemic fraud ("The core of the fraud allegations is that Tricolor illegally used the same loan portfolios as collateral for separate credit lines with multiple banks" to the tune of ~$200M)
First Brands also went under due to fraud ("First Brands had relied on billions of dollars in undisclosed debt, primarily from the private credit market, by borrowing against its invoices. This practice, known as factoring, kept the debt off the company's official balance sheet")
Yes, things feel tighter than they did in the years immediately post-Covid because there was a lot of free $ in the system, a lot of debt collections were paused, and Covid went on long enough for people to start treating that as the new normal when that was never going to be the case.
No, I don't see these as canaries for a 2008-esque event.
The scary thing to keep an eye on is commercial office space debt (e.g. https://finance.yahoo.com/quote/HPP/) which is likely to cause a cascade of fire sales as 5/10 yr debt obligations come due and how that will have cascading effects on commercial bank loans. That will be a hairy situation, but, fortunately, once it passes, rents in downtown areas will plummet and there will be a huge surge in growth in response to more favorable rents. Right now, commercial rents are locked into untenable rates because the loans are contingent on those rates which is resulting in 30%+ unused commercial space in areas like downtown SF.
Yeah loan covenants lock you in like that. But banks don’t want to manage or sell big commercial properties. If it gets dicey for property owners, they’ll work out a deal with their bank.
Remember Getty:
If you owe the bank $100, that's your problem.
If you owe the bank $100 million, that's the bank's problem.
I'm surprised it has taken this long. Everything I thought I knew about economics (and basic finance) has pointed in the direction of imminent pain for consumers, but what I've been hearing is more of a dull ache at most.
I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.
You’re probably underestimating how much credit is available to people. Having money issues? Keep paying your car while you borrow money from Klarna for your DoorDash chipotle.
It took long because during the last Trump era, lenders figured out a neat trick - extend the loan terms to 7 years instead of the conventional 5. That, and the low interest rates hooked people. This exaggerated during the pandemic with people taking insane $1000/month loans.
Trump comes back, downturn comes back to main street, and voila - loans running naked.
One thing the article doesn't mention is deportees. The administration always says illegal immigrants but when you look the vast majority that are being deported are documented people here under some allowed process, they just haven't been granted a green card yet. Documented immigrants have work permits, social security cards, all the thing to find housing, get jobs, engage in banking etc...
When they're picked up and going to be deported, do you think they're going to care about their car loan, home mortgage or credit card debt? Not even a little bit. I had a friend here awaiting asylum for 7 years. She was picked up by ICE, sat for 3 months in detention, finally just agreed to leave because that's was long enough to be evicted by her apartment (and get significant fees for it) be defaulted on her credit cards, and on her car loan.
Who pays for all that debt, in excess of $20,000 for everything. She never will, she goes to another country, finds a decent paying job because she has years of experience in the US and now speaks English. All very valuable skills to a lot of employers in central and south America.
Expect to see a lot more loans being defaulted on. We were lied to about the number of illegals. Now we're going to see the effect of deporting people who were working, participating in the economy, and happy to be here. All because the lies saying they were illegal.
There was a meme (most likely fake) post on reddit from an H1b holder who took out as many lines of credit as they could and left after the whole fee debacle. But there's that dark kernel of truth inside: if your job prospects in the country are wrecked, what's stopping people from cashing in on the way out?
>One thing the article doesn't mention is deportees. The administration always says illegal immigrants but when you look the vast majority that are being deported are documented people here under some allowed process, they just haven't been granted a green card yet.
Documented != legal, one can be documented and an illegal immigrant. If you have a deportation order with a final date in the past, you are a documented illegal immigrant. If you're unlawfully in the US due to overstaying your visa, you are a documented illegal immigrant. Practically every case in the past year has proven out to be the person deported was illegal.
>Documented immigrants have work permits, social security cards, all the thing to find housing, get jobs, engage in banking etc...
Yet they can still be illegal immigrants.
>do you think they're going to care about their car loan, home mortgage or credit card debt?
The vast majority of illegal immigrants being deported have none of those things. All cash.
>Who pays for all that debt, in excess of $20,000 for everything. She never will, she goes to another country
Car gets repossessed, house gets foreclosed. The majority have miniscule or nonexistent credit card debt. Less than a rounding error for the economy as a whole.
Their deportation will increase housing supply, which reduces rent and home prices though!
>We were lied to about the number of illegals. ... All because the lies saying they were illegal.
You are factually incorrect. Documented means that they are legally allowed to be in the country which is why they have received work permits and that they have received social security numbers. They have a legal status which is why they are documented as being here. To say that they dealt in all cash is a factual lie. Where are you getting your data. I'm getting my data first hand from someone who was picked up and also had first hand accounts of hundreds of people in detention. All with work permits all with social security cards all who had legal jobs at the time of their detention. All of them were engaging in the normal commerce of a USA citizen which is to have a debt load and a credit rating. Do you think they had cash to pay for those vehicles? Do you think they had cash to pay for those houses? Do you think apartments don't run credit ratings? You are absolutely foolish to think that this is some massive 30 million people with a cash based underground. Modern banking doesn't work that way, almost no jobs pay that way. No jobs that you're going to get with a work permit and a social security card which is the vast majority of jobs. You think these people just pick your lettuce in the field. That's absolutely insane you really need to educate yourself because you have believed the lies that were told.
The law does not consider them illegal aliens. ICE does not classify them as illegal aliens. Only red-headed political ideologues that are looking for a boogeyman consider them illegal aliens.
You can say that it is a miniscule number of them having credit and debt but you need some evidence to back up your claims. Increasing housing supply at the cost of a greater burden for everyone else isn't a good way to do it. Because these were functioning taxpayer members of society. Then they became burdens to society because they were housed in detention facilities at an extraordinary cost along with the money lost for the proper eviction procedures and debt recovery procedures and everything else.
It is absolutely foolish to take people who were following the legal process and we're legally documented as being here putting them into tension centers causing them to default on their mortgages or their leases. Causing them to default on their car loans and their credit card debt. For you to act like it's a good thing is absolutely insane.
Because you believed the lies that these were illegal criminals that weren't allowed to be here. Go and read the lies of the news media. That's how it was presented. It only takes a small bit of logic to say if they were actually criminals that were not allowed to be here then they wouldn't know where they are. Because there would be no documentation. The fact that they could go get them so quickly was because they were allowed to be here and they were arbitrarily revoking parole statuses and other statuses of people that were granted permission to be here following the processes laid out in the law.
Now you will bear the financial burden for it. Because fools like you think that they were criminal illegal aliens. When they were not they were legal aliens. I highly suggest you go and review the actual many immigration statuses that are granted. Because there are many statuses where you are legally allowed to be in this country as an alien without being granted a visa. Once you have reviewed those I will await your apology.
This goes way beyond the high price of cars or people taking out loans with bad terms.
Americans are struggling all over. Rent is skyrocketing. Inflation is applying massive pressure on regular expenses. Household debt is at an all time high. People all over the country are struggling to keep their utilities connected as energy prices soar. Foreclosures are surging. Individual chapter 7 bankruptcy filings are up 15% from last year too. It's really no wonder repossessions are spiking too.
Economically, things look pretty bleak for a huge percentage of Americans and I'm not seeing much to convince me that they're going to get better any time soon.
And yet Americans are door dashing more than ever and financing everything imaginable.
Not saying citizens deserve this but we eagerly gobble up every excuse possible and then complain that our lifestyles aren't sustainable.
The typical American lifestyle is based around excess. It's no surprise that a nation who spends 3x more on unnecessary garbage than any other nation is struggling financially as climate change makes that excess more expensive.
We do this to ourselves with our pride/ego fixation and our endless excuses for why someone else should fix things or someone else is responsible for it.
We don't vote. We don't think critically. We don't do the hard work to benefit our society long term. We buy into every possible excuse.
I think it has more to do with stagnating wages which haven't kept up with inflation (or for that matter productivity) than it does with irresponsible spending. The growing number of people who can barely keep the lights on aren't spending all their income on door dash. They're cutting back on groceries, going to food banks (who have seen record demand) and being forced to resort to Buy Now Pay Later loans for regular groceries (14% more than they were last year https://www.cbsnews.com/news/buy-now-pay-later-bnpl-loans-gr...)
I live in a city with lots of buses, they are great.
The problem is that they are neuropsychiatric units on wheels, there is always some crazy person being clinically crazy (like talking to imaginary friends), so that makes the whole ride something you don't want to experience often if possible.
Does anyone else hate busses, and the only response you ever get after mentioning this is "NUH UH BUSSES CAN BE GREAT"?
A bus will pretty much always be inferior to a car. Mathematically impossible to run on time. It never gets you where you want to go, just kinda close usually. If one doesn't show up, there is no real feedback without an extensive background metadata system. Never as clean as your own car (unless you're one of those carbage-loving people I suppose, but then you're just going to litter on the bus anyways). Obnoxious, loud, smelly, or crazy people you have to deal with.
I'll never understand the crowd so desperate to have them, but I'll still support the cause if it cleans up the highways for me I guess.
A lot of that is that Americans are buying trucks, not cars. It’s easy to stay under $30k with a sedan, but a sizable group of people think they need the image of driving a full-sized pickup truck to the office and each 7 year loan on an $80k truck is going to drive the average up, not to mention leaving the buyer more cash-strapped due to the higher operating costs.
My favorite is the people who whine about gas prices, when they chose to deliberately shoot themselves in the foot daily by buying a GMC Yukon or something instead of a sedan. To mostly commute to work, but oh no, they need a monster truck because they might have 1.5 children in it occasionally. And everyone knows sedans don't have back seats or cargo space.
The average has just gone past $50l but it is not clear it will stay there. There are a few things that drove it up recently.
One contributor was a surge in EV sales to beat the expiration of the tax credits. EVs on average cost more than non-EVs so that pushed the average up. EVs were almost 12% of September sales with an average price of $58k.
There are plenty of EVs a lot lower that than that, so why was the average EV so high? That brings is to another contribution: in general it was upper-end buyers who currently dominate the market (the potential lower end buyers are probably too worried about the economy and maybe the likely big increases in health insurance for 2026 to buy a car now). Upper end buyers tend to go for the more luxurious cars, whether they are buying an ICE or EV.
Remember though, just because the average is about $50k doesn't mean that there aren't plenty of good new cars for a lot less. A 2026 Toyota Corolla has a base MSRP of $22 725. For $24 575 you can get the hybrid which increases the MPG from 32 city/41 highway to 53 city/46 highway.
Yeah the average is high, that means there are cars cheaper than that. People are spending big because they either are doing no researchand getting suckered, or they are buying nicer cars for vanity reasons.
Automakers realized during the pandemic they could increase prices and reduce production and come out ahead. Import tariffs means you are, as a consumer, held captive by a domestic market to extract from you for your potentially non discretionary personal transportation needs. If you must have a car, the price is the price.
This has slowly been changing as of recently, but now tariffs are eating into automaker balance sheets to the tune of ~$30B, which will have to come from somewhere in transaction volume.
A few years ago my car was totaled by an uninsured illegal in a hit and run, and I was forced to get another one (bought used). This was back when the bubble was even worse, and since I lived on dirt roads, I needed a 4x4. Literally the only thing I could find not clapped out were luxury models, because rich people were about the only people at the time dumping cars that weren't completely clapped out.
Readit News
HN is fond of saying that the only thing propping up the US economy at this point is AI investment (not informed enough to know if that's actually true, but outside of equity prices it sure seems like everything else is blinking "this economy sucks.").
So when will the music stop? Seems like it should've been "yesterday," but what's the argument for it to continue playing for the foreseeable future? The great wealth transfer? AI efficiency/productivity gains (without the vast elimination of jobs)? Something else?
In reality, the dollar's true value will plummet. The FED is starting to lower interest rates again. We are likely going to undergo brutal inflation.
Crashing the economy is obviously very politically unpopular. The left/right will do whatever they can to keep this charade up, even if it means dooming the working class and throwing them some kind of bone to make them think they're ok.
The COVID pandemic was a good example of this. The working class got thrown a $2,000 check while there was billions given to bail out businesses/lots of fraud. Not a lot of people cared because hey, we got a $2k check... Even though that $2k check was not even close to maintaining their relative wealth pre-pandemic due to all of the government's inflationary measures.
There won't be a recession, it won't happen on paper. But the middle/working class will continue to be squeezed. And there will be programs to "rescue us." Maybe it's low cost home programs, maybe it's community college, I'm not sure. But I am sure it will never truly benefit the working/middle class, it'll just be a token to keep them from fully dying.
A lot of people were paid more to not work during COVID restrictions than they earned before or after. $653 billion in federal funds for unemployment programs.
People were getting $600 per week from the feds for a while, then $300/week. Not a single $2000 check, $2400 per month. About the bottom 25 percentile were brought up to 25th percentile income.
But not something one worries or cares about if one doesn't worry about having to be elected and/or is willing to use the military to suppress dissent...
So tanking the economy is a way to keep and maintain power...
But it's good. There is no way to bring back manufacturing jobs to the US while dollar is strong.
Also high inflation may make housing more affordable.
It already has. It's down ~12% vs the EUR. It's even down 4% vs CAD, and Canada's on the front line of having its economy destroyed by Trumponomics. When the global markets have more confidence in the Canadian dollar than the American one, good luck...
Dead Comment
edit: OMG. I will be shorting these.
They seem to have figured out that you can just simply stop caring about the needs of 90% of your population if you systematically withhold any wealth from them and concentrate it to the 10%. The plan it seems is that the economy will increasingly be driven entirely by the upper middle class and above (who are all doing better now than they ever have in history), while the rest of us are left to rot and serve their drinks and clean their homes. The future for the average North American is starting to look a lot like our southern counterparts, where the wealthy elites in the cities rule over an underclass of destitute poverty everywhere else.
1) money has nowhere else go for now
2) great wealth transfer = really doesn't matter as long as the super rich can keep inflating their wealth faster than us peons. if you are above that curve just stay ahead of it at all costs.
3) prolonged pain can be extended indefinitely for most people by keeping them perpetual renters / extending loan terms.
4) all else fails print more money and i guess when it all does collapse doesn't matter, retreat to X country or bunker (lol)
Is it possible to know if you're above 'that' curve? Does above the curve mean your assets are increasing in value faster than inflation?
Well, yes, nominal. But no, not really. Cars (and really this isn't surprising) have been getting steadily more affordable over time. They represent about half the fraction of consumer income that they did in the 80's. AS ALWAYS, please just go to FRED to ask these questions before announcing incorrect answers on the internet. New car price[1] expressed as a fraction of median income:
https://fred.stlouisfed.org/graph/?g=1NbqH
[1] Actually it's new car CPI, so the values are unitless.
I'm really glad that I can live in a city without having to own a car if I don't want to. It makes a significant difference to my monthly expenses. And, honestly, it's a lot nicer and feels a lot more free in many ways. Places are more accessible not less.
I can't imagine being on the bottom rung of society and having yet another awkward expense, especially because you become unreliable if you don't properly invest in the maintenance of the thing. Which might cause you to lose your income altogether.
That said, the problems of car loans are far beyond that - From the article: " The average monthly repayment now stands at more than $750.". That's nuts! I make a solid upper middle-class income, and I can't imagine spending that much on car financing, regardless of the loan length. When we needed a second car, we bought a 6-year-old Volvo station wagon in good condition, it it's still serving us well. Many of my neighbors, who make about half what I do, think we're poor because of it.
The amount of debt Americans routinely and causally take on is honestly ridiculous.
The other car is a 2023 Leaf with the extended range trim, which is sufficient to get us all around the PNW, although I would hesitate to take it east of the Cacades.
How do you know that? They told you outright?
Car free access to existing transit hubs like metro stations is often horrible and not particularly expensive to improve.
We just choose to continue subsidizing a triangle of car dependency. The government finances toll-free roads, mandates parking minimums, and enforces restrictive zoning. Businesses and real estate consumers pick up the tab on the real cost of free parking (higher rents and mortgages, parking garage construction costs). Drivers pour money into car loans, insurance, maintenance, and fuel.
Being tied to transit lines—again, because even in Tokyo transit isn’t as convenient as point-to-point car travel—limits where people can look for jobs. That makes it a poverty trap because people can’t easily find jobs in different areas. And it makes having a family and kids much more logistically complicated. The most transit-dependent cities have abysmal birth rates.
I invite you to compare Orlando and Malmo.
If you have the opportunity to visit both, I would recommend it. They have the same population size (actually, Malmo has more people in it, but, close enough) yet in one it's impossible to get across the street without a car, even to go to the grocery store, and the other has entire portions of the city where cars aren't even able to go. -- Yet everyone manages to get around, and most people would consider it very convenient to do so.
Also, you cant do work in car either. You have to drive and actually pay attention. You cant (or should not) just listen to podcast or loosing yourself in the music. You dont get health benefits of walking a bit or of popping int the store on the way to buy food quickly.
My point here is that if public transport and city are semi reasonably organized, the car has to be actually seriously faster to be worth it.
If that weren't so often the case, people wouldn't lose their shit whenever gas goes up 50 cents/gallon.
It would have been an easy fix 10+ years ago, but as the housing crisis got worse and the working class was priced out, building got a lot more expensive and we have a huge labor crisis in addition to the regulatory crisis.
All solvable, but the political establishment and the political power base (homeowners and landlords) are dead set against solving it.
Chicago is cheaper than car dependent LA in terms of rent.
You can do very well on a modest salary.
Reality is, outside of housing, city life is generally cheaper because it's much more accessible and the tax base is better suited to covering those expenses. So, older generations get the best of all worlds, per usual.
It's not comparable to the US in terms of Salary, but if I compare to the same size City in the UK (Coventry), it's not more expensive to live here than there. Coventry has a decent amount of car dependency for its size.
If we're comparing to a US City, I guess Orlando is pretty close (Orlando has a lower population than Malmö), but home prices are higher. However, there are only larger houses available making the comparison a bit squiff.
https://youtu.be/ztpcWUqVpIg
Enormous car-lots several times larger than the buildings that they serve for example, sprawling 6-lane roads that take 20s to clear a junction on a slow moving bicycle, these things contribute to it being infeasible for more poeple.
Connecting the bike lanes is not a problem, though people will fight it tooth and nail because they wan't all infrastructure spending to go to cars... hence, reinforcing the issue, because when all you have is a hammer...
hard to do biking if there is 33C outside with sun in top of it
For me, it's not the money that's annoying (though of course I'm not pleased by the bills every once in a while). It's the amount of time it takes to keep a car maintained! Seems like just yesterday I took a whole day remote to sit at the mechanics shop for a tire change, but now I have to do the same for an oil change! For this precise reason I end up doing a lot of maintenance late.
As bad as the debt situation is in the US there’s not much a collection agency can do to force you to pay relatively petty sums under 100,000 they will just harass you basically.
The Roman proverb goes “The begger laughs in the face of the bandit” so burnouts spread money before it can be taken from them, then turn around and beg for more. A person who’s established this mentality, the exact amount they owe is the least of there problems.
There's a "welfare cliff" when you try to get into a "must have reliable transportation" job though
There are some accommodations for poor drivers. Politicians loath to raise fuel tax. This shifts costs of roads from drivers onto general taxpayers. Car insurance limits are the same as in the 1970s. This shifts cost of accidents from poor drivers onto accident victims who are not fully compensated. Emissions testing and safety testing is either not done at all or waived for drivers who claim hardship.
https://fred.stlouisfed.org/series/DRCCLACBS credit card delinquencies are similar
https://fred.stlouisfed.org/series/DRSFRMACBS home loans delinquencies look amazing right now, to the surprise of noone, since everyone is sitting happy having locked in their 3% rates a few years back.
My understanding is that Tricolor went under due to systemic fraud ("The core of the fraud allegations is that Tricolor illegally used the same loan portfolios as collateral for separate credit lines with multiple banks" to the tune of ~$200M)
First Brands also went under due to fraud ("First Brands had relied on billions of dollars in undisclosed debt, primarily from the private credit market, by borrowing against its invoices. This practice, known as factoring, kept the debt off the company's official balance sheet")
Yes, things feel tighter than they did in the years immediately post-Covid because there was a lot of free $ in the system, a lot of debt collections were paused, and Covid went on long enough for people to start treating that as the new normal when that was never going to be the case.
No, I don't see these as canaries for a 2008-esque event.
The scary thing to keep an eye on is commercial office space debt (e.g. https://finance.yahoo.com/quote/HPP/) which is likely to cause a cascade of fire sales as 5/10 yr debt obligations come due and how that will have cascading effects on commercial bank loans. That will be a hairy situation, but, fortunately, once it passes, rents in downtown areas will plummet and there will be a huge surge in growth in response to more favorable rents. Right now, commercial rents are locked into untenable rates because the loans are contingent on those rates which is resulting in 30%+ unused commercial space in areas like downtown SF.
Let me get this straight.
A landlord cannot lower the rent, because they took out a loan on the property which promised to the lender that the rent is a particular amount?
> which is resulting in 30%+ unused commercial space in areas like downtown SF.
The loan prevents the landlord from lowering the rent, so the landlord realizes rental income of $0 on the property.
Oh, that's just great.
Remember Getty:
If you owe the bank $100, that's your problem.
If you owe the bank $100 million, that's the bank's problem.
I don't want a crisis, and if we avert one I'll happily update my beliefs. But even if the crisis comes I'll have to figure out why it has been so slow.
Trump comes back, downturn comes back to main street, and voila - loans running naked.
When they're picked up and going to be deported, do you think they're going to care about their car loan, home mortgage or credit card debt? Not even a little bit. I had a friend here awaiting asylum for 7 years. She was picked up by ICE, sat for 3 months in detention, finally just agreed to leave because that's was long enough to be evicted by her apartment (and get significant fees for it) be defaulted on her credit cards, and on her car loan.
Who pays for all that debt, in excess of $20,000 for everything. She never will, she goes to another country, finds a decent paying job because she has years of experience in the US and now speaks English. All very valuable skills to a lot of employers in central and south America.
Expect to see a lot more loans being defaulted on. We were lied to about the number of illegals. Now we're going to see the effect of deporting people who were working, participating in the economy, and happy to be here. All because the lies saying they were illegal.
Documented != legal, one can be documented and an illegal immigrant. If you have a deportation order with a final date in the past, you are a documented illegal immigrant. If you're unlawfully in the US due to overstaying your visa, you are a documented illegal immigrant. Practically every case in the past year has proven out to be the person deported was illegal.
>Documented immigrants have work permits, social security cards, all the thing to find housing, get jobs, engage in banking etc...
Yet they can still be illegal immigrants.
>do you think they're going to care about their car loan, home mortgage or credit card debt?
The vast majority of illegal immigrants being deported have none of those things. All cash.
>Who pays for all that debt, in excess of $20,000 for everything. She never will, she goes to another country
Car gets repossessed, house gets foreclosed. The majority have miniscule or nonexistent credit card debt. Less than a rounding error for the economy as a whole.
Their deportation will increase housing supply, which reduces rent and home prices though!
>We were lied to about the number of illegals. ... All because the lies saying they were illegal.
No we weren't. They are illegal.
The law does not consider them illegal aliens. ICE does not classify them as illegal aliens. Only red-headed political ideologues that are looking for a boogeyman consider them illegal aliens.
You can say that it is a miniscule number of them having credit and debt but you need some evidence to back up your claims. Increasing housing supply at the cost of a greater burden for everyone else isn't a good way to do it. Because these were functioning taxpayer members of society. Then they became burdens to society because they were housed in detention facilities at an extraordinary cost along with the money lost for the proper eviction procedures and debt recovery procedures and everything else.
It is absolutely foolish to take people who were following the legal process and we're legally documented as being here putting them into tension centers causing them to default on their mortgages or their leases. Causing them to default on their car loans and their credit card debt. For you to act like it's a good thing is absolutely insane.
Because you believed the lies that these were illegal criminals that weren't allowed to be here. Go and read the lies of the news media. That's how it was presented. It only takes a small bit of logic to say if they were actually criminals that were not allowed to be here then they wouldn't know where they are. Because there would be no documentation. The fact that they could go get them so quickly was because they were allowed to be here and they were arbitrarily revoking parole statuses and other statuses of people that were granted permission to be here following the processes laid out in the law.
Now you will bear the financial burden for it. Because fools like you think that they were criminal illegal aliens. When they were not they were legal aliens. I highly suggest you go and review the actual many immigration statuses that are granted. Because there are many statuses where you are legally allowed to be in this country as an alien without being granted a visa. Once you have reviewed those I will await your apology.
Remember this the next time someone starts trying to shit-stir about an invisible group of people here.
Americans are struggling all over. Rent is skyrocketing. Inflation is applying massive pressure on regular expenses. Household debt is at an all time high. People all over the country are struggling to keep their utilities connected as energy prices soar. Foreclosures are surging. Individual chapter 7 bankruptcy filings are up 15% from last year too. It's really no wonder repossessions are spiking too.
Economically, things look pretty bleak for a huge percentage of Americans and I'm not seeing much to convince me that they're going to get better any time soon.
Not saying citizens deserve this but we eagerly gobble up every excuse possible and then complain that our lifestyles aren't sustainable.
The typical American lifestyle is based around excess. It's no surprise that a nation who spends 3x more on unnecessary garbage than any other nation is struggling financially as climate change makes that excess more expensive.
We do this to ourselves with our pride/ego fixation and our endless excuses for why someone else should fix things or someone else is responsible for it.
We don't vote. We don't think critically. We don't do the hard work to benefit our society long term. We buy into every possible excuse.
https://www.lendingtree.com/auto/debt-statistics/
The main pattern is that people are paying a lot for cars. Looks like a lot of 6 year+ loans in the new market.
A bus will pretty much always be inferior to a car. Mathematically impossible to run on time. It never gets you where you want to go, just kinda close usually. If one doesn't show up, there is no real feedback without an extensive background metadata system. Never as clean as your own car (unless you're one of those carbage-loving people I suppose, but then you're just going to litter on the bus anyways). Obnoxious, loud, smelly, or crazy people you have to deal with.
I'll never understand the crowd so desperate to have them, but I'll still support the cause if it cleans up the highways for me I guess.
https://www.washingtonpost.com/business/2025/10/17/50000-new...
Starting to find out the risks of a car-centric society in a slow-burn economic crisis.
One contributor was a surge in EV sales to beat the expiration of the tax credits. EVs on average cost more than non-EVs so that pushed the average up. EVs were almost 12% of September sales with an average price of $58k.
There are plenty of EVs a lot lower that than that, so why was the average EV so high? That brings is to another contribution: in general it was upper-end buyers who currently dominate the market (the potential lower end buyers are probably too worried about the economy and maybe the likely big increases in health insurance for 2026 to buy a car now). Upper end buyers tend to go for the more luxurious cars, whether they are buying an ICE or EV.
Remember though, just because the average is about $50k doesn't mean that there aren't plenty of good new cars for a lot less. A 2026 Toyota Corolla has a base MSRP of $22 725. For $24 575 you can get the hybrid which increases the MPG from 32 city/41 highway to 53 city/46 highway.
10 years ago you could go onto a lot and buy a brand new Dodge Dart for around $17,000.
Today, the cheapest Dodge is a Hornet SUV/CUV for $31,000+; the cheapest Jeep is $27,000.
We just don't have new car choices under $20k -- we're all forced into extremely high loans for 'new', or extremely screwed rates for 'used'.
This has slowly been changing as of recently, but now tariffs are eating into automaker balance sheets to the tune of ~$30B, which will have to come from somewhere in transaction volume.
A few years ago my car was totaled by an uninsured illegal in a hit and run, and I was forced to get another one (bought used). This was back when the bubble was even worse, and since I lived on dirt roads, I needed a 4x4. Literally the only thing I could find not clapped out were luxury models, because rich people were about the only people at the time dumping cars that weren't completely clapped out.
There are very reliable, brand new vehicles for $30k. The extra amount is luxury.
average car loan amount and loan duration are also up