I have tried many ways to find a reliable leading indicator of the economy. When this idea flashed in my mind, I did not expect the clue to be so near me. As I travelled around Bishan, I found that many cars are idling in the car park at 9am. The number of idle cars occupied about 30-40 percent of the car park lots. As most people go to work at this time, the car is likely to be idle for the whole day. Owners of these vehicles is most likely cash strapped to spend money on petrol, erp, commercial carparks and have switch to public transport.
In short, they will be paying extra money for road tax and insurance for very little car usage. As their usage is minimum, they will soon realize the cost of the cars outweighed the benefits. Soon, reality bites and they will be forced to sell their cars. If that happen, the car market will be flooded with excess inventory of cars and resale car prices will fall drastically.
The tipping point will be the wave of restructuring by companies to downsize or right size their workforce as the economy falters. If these cars were reduced at the car parks, it will mean that the deleveraging process has begun and sellers have begun to sell their unused cars. This is a watershed and marks the start of the second economic crisis.
During deleveraging, cars will be sold, the last in line will be houses. It is estimated that plenty of people purchased condominium and lived in hdb flats. If interest rate hikes and rental market falls, the people will be faced with a double whammy. For example a couple who live in hdb flat and pays $2,500 per month for the housing installment will find it hard to service the installment when rental market falls to $2,100 per month and interest payment hiked to $3,000 per month. For couples who lost their jobs, their plight will be worst.
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