I met with a very successful entrepreneur recently. We got to talking about what the biggest factors are in terms of whether you'll be successful or not in business.

His answer made me stop and think--and it stuck with me today, after I heard some big economic news.

I've been doing this long enough to have heard a lot of investors and entrepreneurs talk about how a great idea is nice, but it's really more about your ability to execute. Or maybe your ability to recruit the right people.

Those are important, he agreed. But the biggest factors are often the things you can't control--like whether you were born into a free society and whether you had the chance to get an education and have good experiences in life.

But also, more basically: What's the market like? What's the broader economy like?

Do people want what you're selling, and do enough of them have money to spend?

7 Million Americans

These questions are why smart business leaders pay a lot of attention to broader signs in the economy.

And, it's also why a disturbing number that came out of the Federal Reserve Bank of New York Tuesday is worth paying close attention to.

Toward the end of an 1,100-word examination of the data in the New York Fed's Quarterly Report on Household Debt and Credit, economists writing on the entity's blog pointed out the increasing number of Americans who aren't able to keep up with their car payments.

At the end of last year, there were "over 7 million Americans with auto loans that were 90 or more days delinquent," according to the report. That's a big number--bigger than at the peak of the last recession, and likely the biggest ever.

'Your No. 1 Priority'

"The substantial and growing number of distressed borrowers," the Fed economists wrote, "suggests that not all Americans have benefited from the strong labor market and warrants continued monitoring and analysis of this sector."

It's not quite a red alert the way that a massive number of housing defaults would be (or was). But it's concerning nonetheless, according to economists interviewed by The Washington Post about the report.

"Your car loan is your No. 1 priority in terms of payment," Michael Taiano, a senior director at Fitch Ratings, told the Post. "If you don't have a car, you can't get back and forth to work in a lot of areas of the country. A car is usually a higher-priority payment than a home mortgage or rent." 

Once a borrower falls far enough behind to actually lose his or her car, it can be the start of a spiral: no way to get to work or to the doctor, and no way to earn money to keep a house or apartment.

And ultimately, if things spiral a bit, no way to afford your products, or your clients' products.

Published on: Feb 13, 2019
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