Sign of the Times - Economic Update

Millions of Car Loans Overdue

A record 7 million Americans are 3 months behind on their car payments
Feb 12, 2019
"The substantial and growing number of distressed borrowers suggests that not all Americans have benefited from the strong labor market,” economists at the New York Fed wrote in a blog post.

A car loan is typically the first payment people make because a vehicle is critical to getting to work, and someone can live in a car if all else fails. When car loan delinquencies rise, it is usually a sign of significant duress among low-income and working-class Americans.

...

Most of the people who are behind on their bills have low credit scores and are under age 30, suggesting young people are having a difficult time paying for their cars and their student loans at the same time.

Overall, many borrowers have strong credit scores and repay their loans on time, but defaults have been high among “subprime” borrowers with credit scores under 620 on an 850-point scale."



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While the car loan industry by itself would likely not cause financial collapse, it's a good indicator that millions of Americans are not making enough to pay their bills, they are living beyond their means, or both.



Student Loan Defaults

50 Failing Companies at Risk of Going Out of Business in 2019

J.Crew
Sears
GNC
Fred's Pharmacy
JC Penny
Office Depot
Vitamin Shoppe
Neiman Marcus
Pier 1

Land's End

David's Bridal (lots of debt and not drawing as much interest from brides looking to spend less)

Claire's

Eddie Bauer (in 2017 they faced problems with debt, it did manage to emerge from bankruptcy in 2009)

PetSmart (facing debt maturities in 2022, $8 billion in debt)

Payless (closed 600 stores in 2017)

Mattress Firm
The company filed for Chapter 11 bankruptcy protection on October 5, 2018, CNBC reported. Their finance trouble has partly to do with an accounting scandal and what CNBC described as “an onerous store footprint.”

Brookstone

Toys R' Us
In their 2018 bankruptcy filing, they planned to liquidate all the stores.

PG&E
After the California wildfires in 2017 and 2018, they filed for Bankruptcy in January 2019.
"Mercury News reports that PG&E wants to approve $235 million of bonuses for its employees."

Shopko
Filed for bankruptcy in January 2019.  They plan to close 251 out of 361 stores (70% of their locations).

The Weinstein Company
Filed for bankruptcy in March 2018.

Great American Companies in Serious Danger of Disappearing Forever (CheatSheet.com)
- DineEquity (owner of AppleBees and IHOP) is struggling as the younger generation prefers to eat local and at other restaurant choices
- Subway lost more than 900 stores in 2017.

Warning Signs of a Company in Trouble (Investopedia)

Clothing Store insights:
SF Gate goes on to say Z Gallerie wished it invested more in e-commerce and didn’t sink so much into a costly distribution center. Its expansion also didn’t meet its performance goals, which contributed to its business woes.

8 Companies That Could Disappear Before 2019 Is Over [Investor Place]
Feb 5, 2019 (originally published in Feb. 2018)
Go Pro
Fit Bit
Container Store Group
Neiman Marcus (not a publicly traded company)
Immunomedics
Remington (privately held)
Sears
Southeastern Grocers

Housing Market

Existing-home sales slide nearly 5% in March as the on-again-off-again housing market retreats (MarketWatch) 4/22/19

Auto makers in financial trouble

General Motors
"Cost-cutting should make GM a leaner, more flexible business, as Chris Lau argued. There’s still concern as to whether GM can compete in self-driving and electric vehicles, admittedly. But GM’s aim of focusing on more profitable, larger vehicles while managing costs seems like the right move for shareholders.

But that cost-cutting also has raised the ire of many lawmakers. President Trump has said publicly that GM had “better” replace plants being closed in Ohio and Michigan. "
Source: Stocks Facing Big Political Risk in 2019 - Investor Place

Companies affected by the home building and construction market

Caterpillar (CAT)

Financial Companies in Trouble

Deutsche Bank (NYSE:DB)

How to see when wholesale/raw material orders are down