U.S. auto loan applications are being denied at the highest level in over ten years

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A growing number of Americans are bracing for tougher financial conditions, with many expecting to be turned down if they apply for credit cards, auto loans, or mortgages, according to a new report from the New York Federal Reserve.In February, 46.7% of survey participants said they believe getting credit will be more difficult a year from now — the highest level recorded since June 2024, according to the New York Fed’s Survey of Consumer Expectations (SCE).The share of people who wanted to borrow but didn’t apply due to fear of rejection — known as “discouraged borrowers” — rose to 8.5%, the highest point since the survey began in October 2013.Meanwhile, consumers’ perceived likelihood of being denied an auto loan climbed to 33.5%, a record high since the monthly survey started.The number of people who said they could cover a $2,000 emergency expense within the next month dropped to 62.7%, the lowest figure in the survey’s history.These grim figures follow a separate report from the University of Michigan, which showed consumer sentiment in March sinking to its lowest level in over two years. Economists attribute the decline to growing unease over President Trump’s economic agenda.“The foundation of the economy is starting to show stress: layoffs are inching up, hiring is cooling, confidence is falling, and inflation expectations are climbing,” said Lydia Boussour, senior economist at EY Parthenon. “The risk of recession is on the rise.”Although inflation eased slightly last month, more Americans are voicing concern about the economic fallout from Trump’s continued trade conflicts. Tariffs — import duties typically paid by businesses like Walmart and Target — are often passed down to consumers in the form of higher prices.Those fears helped drag the stock market into correction territory last week, with major indexes falling more than 10% from their recent peaks. However, stocks began rebounding, with markets rising for the second straight day on Monday.Signs of consumer strain also emerged in February retail sales, which rose just 0.2% nationwide, falling short of expectations. Some major chains have flagged weakening consumer demand.Dollar General sounded a particularly stark warning last week. The discount retailer’s CEO told analysts that some customers are now struggling to afford even the most basic items.