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We might’ve gotten Q3 advance GDP yesterday, and September private earnings and outlays right now, ordinarily. What indicators do we’ve got for the state of the macroeconomy? Right here’s one: delinquincies on auto loans (for swimming pools of asset backed securities).
Supply: Fitch, accessed 10/31/2025.
Auto mortgage delinquencies (60+ days) on swimming pools of loans in subprime ABS have surged to six.5% in September. Since there seems to be seasonality, it’s helpful to check in opposition to September 2024: 6.12%. (Delinquency charges for the prime ABS pool is comparatively unchanged over the yr, at 0.37%).
The ABS deliquency fee is way larger than at any interval of the 2007-09 recession, and better than on the eve of the Covid recession, arguably when the financial system was slowing drastically.
The annualized web loss (ANL) index is barely down, 9.41 vs. 9.79 in September of 2024. This index is partly supported by the rise in used automotive costs, e.g. Manheim Index, which has risen from 202.96 to 207.03, or 2%, over the corresponding interval.
Is the delinquency fee of use in predicting an incipient recession? If the traits of the loans have been fixed, maybe so. Nonetheless, as Adams et al. (2024) level out, the post-Covid loans have been of bigger measurement than for earlier origination years, and this issue seems to be an essential consider delinquencies. Therefore, I’d be cautious of extrapolating from earlier episodes the predictive energy of the delinquency fee, at the least in ranges.
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