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Americans owe 75% more in auto debt than we did at the depth of the recession in 2009. That matters for the economy and households’ financial health. But it also matters for our transportation system. [THREAD] 1/ frontiergroup.org/reports/fg/dri… 
The rise in auto sales over the last several years has, unsurprisingly, tracked with an increase in the number of registered vehicles, which increased by 18.8 million between 2010 and 2016. 2/
There is a common belief that “the economy” is responsible – by which we generally mean factors like employment and income. And those matter. But credit conditions also matter. A lot, it turns out. 3/
A 2014 study by researchers at the Federal Reserve found that credit market conditions “are a significant influence on auto sales, as large as factors such as unemployment and income.” 4/ federalreserve.gov/econresdata/fe…
It makes sense. Nearly all new car and most used car sales are financed. And the terms and rates of a loan have a big impact on the size of the monthly payment - the barometer many households use in determining affordability. 5/
Low interest rates and longer repayment terms – both of which have been the norm post-recession – reduce monthly payments. Research shows that higher income people react more to interest rates, others to longer loan terms. 6/ econ.yale.edu/~pg87/creditc.…
So, it’s little surprise that auto lending has surged across income and credit score categories. 7/
As we wrote in 2015, it had never been cheaper to climb into an expensive car. And, if you have credit problems, the loosening of the reins on subprime lending has made it easier to get into a car, period. 8/ frontiergroup.org/blogs/blog/fg/…
Today, in early 2019, the auto binge seems to be winding down. Interest rates are rising. There is more hesitancy around subprime lending. Delinquencies are on the rise. (Chart: NY Fed) 9/
So, now is a good time to step back and ask whether this was all such a hot idea in the first place. 10/
Clearly, there was a boost to the economy. And many households that needed access to a vehicle got it (though, given the frequency of exorbitant interest rates and repossessions in the subprime lending space, not always for long). 11/
But the surge in auto sales has also likely added traffic to our streets, pollution to our air, and made it harder to reach our climate goals. The financial hangover for many overextended borrowers will be real. 12/
The fact that loan delinquencies are rising already, in an ostensibly good economy, is alarming. What will happen in the event of a recession? 13/
It also stands to reason that the ability to finance “more car” has contributed to the rise in SUV sales. And there’s increasing evidence (thanks to research from @TransitCenter and @UCLALuskin) that there is an impact on transit ridership. 14/
So, we’ve moved a lot of metal in the last seven or eight years. But are we collectively better off? Could we have done anything differently or better in response to the recession … 15/
… to improve transit, encourage shared transportation, and reduce the incentive to buy large, polluting vehicles that will be a financial albatross for many families and a long-term environmental burden? 16/
And, given that we’ve now pumped tens of millions more of those vehicles onto the roads, how do we deal with the problems that have resulted? Those are the questions I’m left asking today. End/
We’ll be sharing additional tidbits of data from our new report on auto lending in the next few days. And don’t forget to follow @FrontierGroupUS @USPIRG and lead report co-author @FrontierRJ for more. End+1/
