14 February 2019 FT — Articles to Read

14 February 2019


Question: Which U.S. State has the highest median home value and what is that value?


Fed policymaker warns on limiting growth – Pg. 4

–          The Federal Reserve needs to avoid inadvertently crimping US growth given rising nervousness among businesses about the outlook at home and abroad…

–          …marked change in corporations’ mood since a year ago, as executives digested hazards including trade tensions and slowing growth in Europe and china

–          The consumer price index has risen 1.6% in the past 12 months, …

–          The core rate of inflation, which excludes food and fuel, held at 2.2%

–          The balance sheet was boosted to $4.5tn during the Fed’s financial crisis interventions, but it has since reduced to about $4tn

–          …the Fed has already made “considerable progress” in normalizing the size of the balance sheet.  Reserves were now about $1.6tn, down 40% from their peak levels…


Concern grows over consumer credit as 7m Americans fall behind on car loans – Pg. 19

–          The number of borrowers in the US who are seriously behind on their car loans rose to the highest level on record in 2018, raising concern about the deterioration of consumer credit despite strength in the broader economy

–          More than 7m Americans are 90 days behind and considered “seriously delinquent” on car loan payments, more than 1m above the previous peak in 2010, …

–          Close to 8.2% of so-called subprime borrowers – those with credit scores below 620 – became seriously delinquent last year, the highest level since 2010

–          Potentially more concerning for some economists, the transition into serious delinquency also rose for slightly higher quality borrowers – those with credit scores between 620 and 720

–          Overall, the percentage of borrowers that became seriously delinquent in 2018 was 2.4%, up from 2.3% the year before

–          Car loans are seen as a barometer of the health of consumer credit because for people living in much of America a car is needed to get to work, meaning payments are prioritized above other consumer borrowing

–          In part, the growth in unpaid loans reflects the sheer growth of borrowing.  The auto loan market is now worth $1.3tn.  Although the 7.02m people who are seriously delinquent is a record, the percentage of total borrowers – 4.5% – has not eclipsed the level set during the financial crisis.  Last year marked the highest origination volume on record with $584m in new auto loans and leases appearing on credit reports

–          Analysts and investors attribute the rise in delinquencies in part to the growth of more aggressive non-bank lenders willing to extend credit to lower-quality borrowers


Answer: The Aloha State: Hawaii ($617,400)