Journal Article

When the Music Stops: Slowing Wage Growth May Lead to More Delinquent Debt

Abstract: Subprime auto debt has risen nearly 10 percent above pre-pandemic levels, and delinquency rates have increased despite high wage growth in the economy. Historically, high wage growth has been associated with lower transitions into delinquency. Should wage growth slow, delinquency rates would likely rise even higher, especially among subprime borrowers.

Keywords: wages; consumer debts; behavioral economics;

JEL Classification: D14; D91; J31;

Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2023-03-24

Pages: 4