Another Credit Crash Coming? This Stress Indicator Is Hitting Financial Crisis Levels.

Economic Overview - The current economic landscape is characterized by a K-shaped recovery, where higher income groups are thriving while lower income groups are struggling [1] - Financial markets are responding positively to GDP growth and corporate earnings, contributing to the S&P 500 reaching new highs [1][2] Consumer Spending - Overall personal spending has shown resilience, averaging a 0.4% month-over-month gain, which is crucial for economic momentum [2] - However, much of this spending is being financed through credit, indicating that consumers are facing financial difficulties [3] Credit Card Delinquency - Credit card delinquency rates are approaching record highs, with 12.7% of credit card debt being at least 90 days delinquent in Q4 2025, the highest since Q1 2011 [6] - The current delinquency rate is nearing levels seen during the financial crisis, suggesting a potential risk in the credit market within the next year [7] Wage Growth vs. Inflation - U.S. wage growth has slowed but remains above 3% annually, which ideally should support increased consumer spending [9] - Despite wage growth, affordability concerns persist due to inflation hovering around 3% annually, leading consumers to rely more on credit card debt to maintain spending [10]