Credit unions have had a positive start to November, with good news on several fronts.
- The Federal Reserve kept interest rates on hold for a second consecutive meeting, taking a cautious stance at a time when rapid inflation is retreating but has not reached the target goal of 2 percent.
- Consumer spending ticked up to 7 percent in September from 4 percent in August, reflecting a relatively positive sentiment.
- The Bureau of Labor Statistics reported that the U.S. economy added 150,000 jobs and the unemployment rate rose a tenth of a percentage point to 3.9 in October, positive news in the eyes of economists.
- It also appears the union strike against the automakers has ended, pending contract ratification.
However, auto lending rates remain sky high with the average auto loan interest rates across all credit profiles ranging from 5.07 percent to 14.18 percent for new cars and 7.09 percent to 21.38 percent for used cars, pricing many would-be buyers out of the market. While total new-light-vehicle sales were up 1.6 percent in October from a year ago, the MSRP of those vehicles remained high and the average incentive spend from manufacturers declined 1.4 percent to $2,322, according to Motor Intelligence data.
Additionally, the Big 3 automakers have signaled that the costs accrued to come to an agreement with the United Auto Workers Union will be passed on to consumers, i.e., higher prices. Wards Intelligence estimates that the roughly 6-week long union strike resulted in 35,000 lost deliveries in October and November sales will continue to see some lingering effects. Used vehicle inventories remain challenging as dealers resist inflated auction prices and consumers continue to hold on to their vehicles. With all of this in flux, credit unions must keep their eye on the target for the remainder of the year.