Layoffs, Delinquencies, and Tariffs: Your Questions, Answered By The Experts

During each Market Pulse webinar, our audience submits questions in real time to our expert speakers. For our October Market Pulse webinar, our panel included Dr. Robert Wescott, President and Founder of Keybridge Research LLC and David Sojka, Risk Advisor at Equifax. Below are their answers on questions around delinquencies, tariffs, and more.

Q: Do you see a difference in white collar vs. blue collar layoffs, and how do you think that is impacting delinquencies?

Dr. Robert Wescott: The biggest increase in the absolute number of layoffs over the past month has been in professional and business services-not in retailing, not in leisure and hospitality, and not in the government sector. However, historically layoff rates are higher in retailing, leisure, hospitality, etc. This split makes it a little hard to give a definitive answer. However, it seems likely that spreading layoffs among higher income professional and business services workers may be putting more pressure on white collar workers, a situation that likely is being compounded by the restart of student debt payments, which also affects this group more.

Q: What are tariffs meant to do?

Wescott: Tariffs are simply a tax on imports paid by domestic consumers. In the early days of America, implementing state sales taxes and income taxes were difficult and required sophisticated government tax collection schemes. But customs or tariffs could be collected fairly easily by customs agents at ports. So back in the 1700s and 1800s they were just a relatively straightforward way to collect revenues. Tariffs can be used to discriminate against goods produced in foreign countries to try to boost domestic industry. However, they are generally disliked by economists because they can make domestic manufacturers raise prices and become less efficient in their operations than world class manufacturing standards. Over time, high tariffs make a country uncompetitive globally. However, they sometimes can play a useful role if a foreign country actively subsidizes its exports to try to "buy global market share."

Q: Where does Buy Now Pay Later (BNPL) appear in the debt categories? Is it consumer non-revolving?

David Sojka: BNPL tradelines are not currently being shown to lenders on the credit file. They are being suppressed until their impact to scores, attributes, and strategies has been properly analyzed. As for how the BNPL trades are being reported, they are reported as an Installment Loan or Line of Credit.

Q: Given the current predictions for Senate and House control, and considering both candidates' proposed economic policies, what potential synergies could exist between these political scenarios that might lead to a positive economic outcome, regardless of which party wins the presidency? For instance, how might a split control (e.g., Republican Senate and Democrat President) result in balanced, growth-focused policies that leverage both fiscal prudence and strategic investment in key areas like infrastructure, child tax credits, or R&D incentives?

Wescott: Many people think split control of Congress or split control between the White House and the Congress can prevent extreme policy measures. Some would say, for example, that Republicans, if in total control, would cut taxes too far and that Democrats, if in total control, might raise spending too high-with total control for either party leading to unsustainable budget deficits. Most economists would prefer a "middle of the road" balance with economic policies, with reasonable corporate taxes to give incentives for businesses to invest, reasonable social assistance spending to be "fair" to people with disabilities or the elderly, and a "reasonable" regulatory burden that protects the health of workers and brings clean water and clean air to breathe, but that is not so aggressive that it causes businesses to cancel investment plans, or even worse, leave American locations for foreign production locations.

*The opinions, estimates, and forecasts presented herein are for general information use only. This material is based upon information that we consider to be reliable, but we do not represent that it is accurate or complete. No person should consider distribution of this material as making any representation or warranty with respect to such material and should not rely upon it as such. Equifax does not assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice. The opinions, estimates, forecasts, and other views published herein represent the views of the presenters as of the date indicated and do not necessarily represent the views of Equifax or its management.