While acknowledging there are some murky points about the latest U.S. employment trends that could concern finance companies and their origination departments, Manheim chief economist Tom Webb explained how managers can focus on the most important elements that can keep the contract current and money flowing through receivables.

During his quarterly conference call this week, Webb first conceded there are three indicators of the labor market “that are, let’s say, less than robust.” That group included:

— Full employment still not getting back to its previous peak yet.

— Wage and salary growth being what Webb called “mediocre” at about 2 percent.

— A large number of people being employed part-time involuntarily.

“But the biggest benefit from the lenders is the fact that there is a lot more job stability out there,” Webb said. “If you look at initial jobless claims, the data adjusted for employment would suggest to you that if a person is employed full-time today, the odds of the person losing that job is less than it’s ever been.

“So that stability certainly provides the consumer with some confidence, but it also should provide the lender with some confidence because that’s one of the primary reasons for a default — a job loss,” he continued.

Among the unemployed, the U.S. Bureau of Labor Statistics (BLS) reported the number of new entrants decreased by 157,000 in March and is down by 342,000 so far this year.

“I think the stability numbers are looking very, very good,” Webb said.

Furthermore, BLS highlighted that there were 5.1 million job openings on the last business day of February. While that reading is little changed from January, this figure also was the highest level of job openings since January 2001.

“The numbers that came out in terms of job openings also are very strong,” Webb said.

Tax Season Update

Also during the call, Webb touched on this year’s tax season, which he described as “fairly muted this year.”

According to the IRS data available through March 27, federal refunds softened by 1.1 percent or $2.3 billion year-over-year.

“As we’ve seen for a couple of years, the seasonal impact of these monies is less than what it used to be, primarily because a lot of dealers are using the down-payment deferral programs and actually booking sales in the fourth quarter of the year as opposed to relying solely on the traditional tax season,” Webb said.

However, Webb isn’t ready to declare that these sales programs will diminish the impact of tax season entirely.

“I still think it will be extremely important just because it does represent a nice chunk of change to run a household that always in search of that down-payment money,” Webb said.

“And in that tax refund money, that’s just aggregate numbers for everybody. It’s important to note how it’s distributed,” he continued. “As you know, the used-vehicle market is primarily supported by that earned income tax credit. There proposals among bipartisans to increase that program in future years so those monies could grow as opposed to just any part of the tax refund base. That certainly would be supportive to a more pronounced shift in terms of vehicles sold at auction.”