Hey friends - welcome back to your Friday morning. Enjoy your weekend for me.

🌎 The Big Picture

This week wasn’t as much major news as last week, but there were a few reports that I think give better insights into what’s really going on than the main numbers the market likes to follow. We often say "the economy" is doing well if consumer spending keeps growing, but those numbers don't always capture the real experience for everyone.

People spending more each month doesn't always mean things are getting easier. Everyone having a job doesn't mean things are better if working 40 hours/week doesn't cover basic living expenses. Are people still able to build savings, or are they perpetually living paycheck-to-paycheck? Are the essential costs getting so high that they crowd out everything that makes life enjoyable?

We don't have a lot of great ways to track how much of a financial strain people are under. But here are a few recent stats released this week worth looking at:

1) Personal Savings Rate = 4.5%
That's how much of their income people are able to save after expenses. That's down from 6-8% in 2019. It was 10-15% for decades until the '90s.

2) Household Debt = $18.39 trillion (a record high)
That's total balances across credit cards, student loans, mortgages, auto loans, and more. The "debt hits record highs" headlines are mostly for clicks, because debt balances are likely to keep inflating with higher education costs, home prices, and other things. Also, these balances include credit card debt of people who pay it off every month and never pay interest. That's just a long-term trend of people paying more on cards for convenience and points.

The main thing to look at is whether people are current on their payments. And they're really starting to fall behind.
% of balances 90+ days late (seriously delinquent):
🚩 Credit Cards: 12.3% (rising fast, highest since the Great Recession)
🚩 Auto Loans: 5% (rising, now in-line with peaks of the last two recessions)
🚩 Student Loans: 10.2% (big spike back to pre-pandemic levels with payment restart)
🚩 Other/Retail/Appliances: 9.6% (rising quickly, highest in over a decade)
✅ Mortgages/Homes: <1% (very low - most people who can afford a home have locked in low rates)

3) Another unseen risk: These numbers from the Fed don't really capture the massive new reliance on Buy-Now-Pay-Later. BNPL on track for $120B in purchases from 91 million Americans in 2025. At least 10% of users have missed a payment, and those late fees can add up quickly.

BNPL will start being reported to credit bureaus soon, and we'll see the real scale of how many people are stretched thin.

What does all of this mean?
It could mean people are spending more irresponsibly than ever before. OR it could more likely be a sign of the strain of the high cost of living, education, healthcare, and housing. Inflation is "down", but that just means things are getting more expensive less quickly. High costs are still straining most Americans' budgets.

What happens if costs keep rising?

All eyes will be on the inflation report on Tuesday to see if tariffs are driving prices higher yet.

Get the full breakdown of all the trends affecting your home, wallet, and career in the new Weekend Scoop on the Scoops app!

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❔ The Big Question of the Week

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