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Kansas City Fed warns slow wage growth could spur debt problems

Subprime auto debt back above pre-pandemic levels and consumer debt at highest level ever

Kansas City Federal Reserve

Researchers from the Federal Reserve Bank of Kansas City warn slowing wage growth could create a rapid rise in debt delinquencies.

“Although delinquency rates have risen, they would likely be even higher without strong wage and salary growth,” they argue. If the labour market cools through large layoffs or declining wage growth, delinquencies could rise “rapidly”.

The research was written by Kansas City Fed vice-president Jason Brown and economist Colton Tousey.

“Subprime auto debt has risen

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