Earlier this year President Donald Trump claimed that he had “defeated” inflation and that the US economy was getting back to normal.
However, as much as Trump may like to claim this, the truth is the opposite as Americans complain about price rises and a new financial crisis looms fast on the horizon.
In the past century, the United States has had to deal with several major financial crises including the 2008 financial crash and Great Recession, 1987’s Black Monday, and the Great Depression of the late 1920s and early 1930s.
Experts are now warning there is another crisis coming for US economy. The crisis concerns the car lending market and rising number of car repossessions in the United States as Americans default on the car finance payments, an issue affecting millions of Americans and setting alarm bells ringing on Wall Street.
In a statement to ReachPlc, Ignas Ryla, head of B2B Sales at used car parts firm Ovoko, warned: “Auto loan delinquencies have reached alarming levels, with overall 60+ day delinquency rates at 1.38% in Q1 2025, exceeding the 1.33% peak in 2009, and subprime delinquencies hitting a record 6.6%.
“1.73 million vehicles were repossessed in 2024, the highest number since the 2008 financial crisis, and Americans now owe $1.66 trillion (£1.24tn) in auto debt, with trends looking alarmingly similar to those before the Great Recession.
“The recent collapses of Tricolor and First Brands have exposed fraud and reckless lending, with major banks, including JP Morgan Chase and Fifth Third, set to lose hundreds of millions of dollars.
“The average new car price has topped $50,000 (£37,843) for the first time, 20% of newly originated car notes are over $1,000 (£749) monthly, and Gen Zers have the highest delinquency rate at 7.5%.”
These concerns have been echoed by Carl Hazeley, CEO of financial information platform Finimize, who said that the problem was reaching Great Recession levels of magnitude and warned we could be seeing the start of a “cascading” effect on the US economy.
Carl said: “Car finance defaults are worth watching closely. Auto loan delinquencies are approaching Great Recession levels, with nearly 5% of loans currently delinquent and subprime delinquencies at 6.43%.
“What makes this particularly concerning is the cascade effect. Losing access to a car can mean losing your job, your ability to get your kids to school, or access to healthcare.
“And right now, Americans are being rejected for auto loans at the highest rates since 2013, with expected rejection rates at 33.5%.The warning signs are there in the data.”
However, car finance payments and defaults aren’t the only economy issues setting alarm bells ringing on Wall Street as Trump’s escalating war with China threatens to destabilise the US and global economies as he threatens to impose more tariffs, reports the Telegraph.
The hope is that a compromise can be reached between Trump and Chinese premier Xi Jinping at the Asia-Pacific Economic Cooperation summit in South Korea next week.