Our Lamestream Fake News Lyin' Media must admit one thing: the economy is good! To the extent any president deserves credit for the state of the economy, Donald Trump, American president, deserves credit. Yes, the S&P 500's gains for 2018 were wiped out in December, but things are mostly good! Corporate earnings are beginning to slow down, but they've been strong. Unemployment is at or near historic lows. All these are continuation of a years-long trend that began in the Obama years, but it's a good continuation.

So how is this Washington Post report possible?

A record 7 million Americans are 90 days or more behind on their auto loan payments, the Federal Reserve Bank of New York reported Tuesday, even more than during the wake of the financial crisis. Economists warn that this is a red flag. Despite the strong economy and low unemployment rate, many Americans are struggling to pay their bills. “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.

The economy of the Dow Jones Industrial Average is not the economy many Americans experience. Only around half of Americans own stocks and have seen the benefits of the bull market. That is, half of Americans have no retirement account. Many communities across the United States have not truly recovered from The Great Recession. That recovery has been remarkably uneven, as a huge share of the employment gains went to already prosperous areas and made the inequality and imbalance of the economy worse than ever. In many communities, "real wages"—that is, pay when you account for the rising price of goods—have been stagnant for decades.

A view of East 105th Street on Clevelands East Side. Dustin Franz Getty Images

Because people aren't making much more than they need to spend on essentials every week, they can't save money or build wealth. This is made all the worse by the unholy albatross of student loan debt, a $1.5 trillion anchor preventing many Americans from making any socioeconomic moves. The recent government shutdown exposed just how common it is—even among federal employees—for Americans to be living paycheck to paycheck. 4 in 10 Americans cannot cover a one-time $400 emergency expense. The Post report is an alarming sign that these chickens may be coming home to roost.

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...

People who are three months or more behind on their car payments often lose their vehicle, making it even more difficult to get to work, the doctor’s office or other critical places. The New York Fed said that there were over a million more “troubled borrowers” at the end of 2018 than there were in 2010, when unemployment hit 10 percent and the auto loan delinquency rate peaked. Today, unemployment is 4 percent and job openings are at an all-time high, yet a significant number of people cannot pay their car loan.

So the auto loan situation is worse now than during the Great Recession, despite low unemployment and a very strong labor market.

Traders work on the floor of the New York Stock Exchange in 2014. Andrew Burton Getty Images

This is, first of all, a sign of a bubble—and economists have warned of an auto-loan bubble for a while now. Conveniently, as Bloomberg explained, it follows the exact model of the subprime mortgage industry that sunk the world economy in 2007-2008.

It’s all happening in the market for subprime auto bonds, where loans to American consumers with some of the patchiest credit histories are packaged into securities to be sold to big investors. A decade after risky mortgage lending toppled the U.S. financial system, the securities have rarely been so popular. But the collateral behind the bonds is getting less safe: car-owners are increasingly falling behind on bigger loans with longer repayment terms made against depreciating assets.

Now, auto loans are only around a trillion-dollar industry—far smaller than the $9 trillion mortgage market that went bust and brought the temple down with it. But it does seem primed to pop, with borrowers on subprime loans taking the first hit. Again, from the WaPo:

Rates can vary substantially depending on a borrower’s credit score and where they obtain a loan. A “prime” borrower with a credit score in the range of 661 to 780 can get an auto loan rate of about 4.5 to 6 percent, according to NerdWallet. In contrast, a subprime borrower is typically looking at rates between 14.5 and 20 percent...non-prime and subprime auto loans increased from 28 percent of the market in 2009 to 39 percent in 2015, a reminder of how aggressively lenders went after borrowers who were on the margin of being able to pay.

The repo lot for Relentless Recoverys in Cleveland. Dustin Franz Getty Images

It might be boom time for corporate earnings, but it's also boom time for the repo men. With new tracking tools, it's easier to repossess a car than ever—and there are a lot more cars attached to delinquent loans to repossess. Even a repo guy who talked to the Post admitted this phenomenon was a systemic issue, not some crisis of individual irresponsibility:

“So much of America is just a heartbeat away from a repossession — even good people, decent people who aren’t deadbeats,” said Patrick Altes, a veteran agent in Daytona Beach, Fla. “It seems like a different environment than it’s ever been.”

And, of course, all these burdens fall disproportionately on young people with low credit scores who are also battling student loans.

In this, as in so many things, the Trump administration has been no help at all. Our big boy president's most recent action on auto loans was to sign a bill repealing a rule from the Consumer Financial Protection Bureau that attempted to curb racial bias in lending and protect minority customers from predatory practices. Black Americans were disproportionately targeted with subprime mortgages as well—even when they had good credit—which is part of why those families lost half their wealth in the Great Recession. In 2017, the median wealth of white households was $171,000. For black households, it was $17,100.

Trump hands a bill-signing pen to Mulvaney, the Hack of All Trades. Pool Getty Images

In 2017, Trump installed the Hack of All Trades, Mick Mulvaney, at the Consumer Financial Protection Bureau. His job was essentially to destroy it. The agency, under new leadership now that Mulvaney is Trump's chief of staff, is now a reliable friend to payday lenders. That is, it's now serving the exact kind of interests—who prey on customers who are often among society's most disadvantaged—that it was established to protect them against. Recently, the agency fined a man who spent eight years scamming military veterans to the tune of one dollar. This is reportedly called the "Mulvaney discount."

Secretary of Education Betsy DeVos has undertaken a similar mission when it comes to student loans. DeVos had extensive connections to for-profit education services before she got the gig, including companies that service loans. DeVos has lamented how student debt is "stealing from future generations," but hasn't actually done much about it. In fact, she fought like hell against implementing an Obama-era policy that protected borrowers who were defrauded by their colleges, or whose institutions closed. After losing a court battle, she grudgingly agreed to cancel $150 million in student loan debt.

Betsy DeVos Chip Somodevilla Getty Images

All this is to say that the system is badly broken, and the man elected on a platform of blowing it up has only worked to crank up the gears of economic injustice. There was no greater fraud than the Trumpian pledge to Drain the Swamp, a feat he promised to accomplish with his superpower: Being Rich. Instead, what we've got is The Great American Heist. But all the while, as 20 percent of Americans control 90 percent of the country's wealth, the bottom 80 percent of folks are struggling mightily against what they now know is a truly rigged system. They tried electing the Tangerine Generalissimo to fix it, and all they got was snake oil. After all, real wages sunk 2 cents in the 2017 boom economy.

For the rich folks screaming about a 70 percent top marginal tax rate or a billionaire tax or a Green New Deal: there are thousands of ordinary people out in the country whose labor makes the economy run, and who did not go to any Trump rallies and probably found him disgraceful. But they ended up voting for an insane reality TV racist because he at least grasped their visceral anger at the status quo. If we don't find a solution together, who will they turn to next? And can you really blame them?

Jack Holmes Politics Editor Jack Holmes is the Politics Editor at Esquire, where he writes daily and edits the Politics Blog with Charles P Pierce.

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