The headlines are full of stock market rallies, but beneath the surface, the real economy is falling apart. Consumers are beyond broke, auto loan delinquencies are at record highs, student loan borrowers are getting wiped out, and the wealth gap is now driving half of all U.S. spending.
The numbers don’t lie. More than 2.3 million student loan borrowers are about to see their credit scores drop into subprime territory. A missed payment means a 129-point hit—a financial knockout that makes it even harder to borrow in the future. Meanwhile, 1.4 million Americans are already at risk of defaulting on their student loans.
People aren’t choosing between luxuries and savings anymore. They’re choosing between their mortgage, car payment, credit card bill, buy-now-pay-later debt, or student loans. And as debt piles up, 3% of all outstanding balances are already in delinquency.
And yet, while the American consumer collapses, foreign investors just bought $76.5 billion worth of U.S. stocks—the fastest pace in history. The problem? They’ve done this before—right before the 1987 crash, the 2000 dot-com bubble, and the 2008 financial crisis. Their timing is historically awful.
AAII Bearish Sentiment just recorded its fourth most bearish reading in 30 years. The last three times? March 2009, October 2008, and September 2022—each followed by brutal market losses. February 2025 just joined the list, with the S&P only 3.1% off its highs.
The Dow is moving just like it did in 2008—wild swings before the real drop hits. And if history is any guide, the market is about to wake up to what consumers already know—the recession is here.
Sources:
https://x.com/UnicusResearch/status/1724849506976420255
https://x.com/jasonc_nc/status/1895854920705982905
https://x.com/MacroEdgeRes/status/1895916254906761519
https://x.com/Barchart/status/1895911171213164772
https://x.com/Marlin_Capital/status/1895932592655876407
https://x.com/great_martis/status/1895940428299714857