AMERICA: Time to be AWARE!

1. Wall Street acting like a race track

Status: This is partly accurate, as some recent stock market behavior has raised concerns, but it’s not a universal description of the entire market.

Concerns about “hunches”: Financial analysts have voiced concerns about high valuations in parts of the market, particularly large-cap tech stocks, fueled by excitement over artificial intelligence. JPMorgan’s chief global strategist compared the risks to “castles in the sky” and noted that certain “frothy markets” might be “not tethered to reality”.
Concerns about market structure: Other analysts have pointed to the passive investing trend, where large amounts of money flow into index funds and exchange-traded funds (ETFs) regardless of the individual company valuations. This has distorted the market’s price-discovery mechanism and inflated the prices of major companies within those indexes.
Market volatility: In the first half of 2025, the market experienced significant volatility, including a sharp drop in April followed by a rapid rebound to new highs in July. This kind of unpredictable swing can give the impression of betting rather than sober investment.
Fundamental investing continues: Despite these concerns, fundamental investing—where investors analyze a company’s performance, growth prospects, and valuation—has not disappeared. Most major financial news reports still center around fundamentals rather than speculation.

2. Jobs rapidly disappearing

Status: This statement is misleading. While the job market is cooling from the rapid hiring pace seen in recent years, the U.S. is not experiencing widespread, rapid job disappearance.

Softer hiring, not widespread disappearance: The number of monthly jobs added is decreasing, and some sectors are shedding jobs, but the overall market remains resilient and continues to grow, albeit at a slower pace.
Targeted job losses: The most significant and rapid job losses are occurring in specific sectors and among certain demographics. These include traditional roles susceptible to technological advancements, such as data entry keyers and telemarketers. Recent college graduates are also reportedly facing a difficult entry-level market.
Labor shortages persist: At the same time, a significant labor shortage persists in the economy, particularly for skilled talent. Reports from 2025 indicated that many employers are unable to fill open vacancies, suggesting a mismatch in skills rather than an outright disappearance of jobs.
Unemployment remains low: Despite the cooling, the unemployment rate remains low by historical standards.

3. Stores closing at an alarming rate

Status: Accurate. The number of retail store closures in 2025 is higher than in the previous year and has been described as “alarming”.

Significant closures in 2025: Research firms reported that approximately 6,000 stores closed in the first half of 2025, with projections for 15,000 closures by the end of the year. This is more than double the number of closures in 2024 and dwarfs the number of store openings.
Underlying causes: Multiple factors are driving the closures.
- Post-pandemic shift: The pandemic accelerated the move toward e-commerce, reducing in-store traffic.
- Inflation and high costs: Persistent inflation, high interest rates, and tariff-related price hikes have increased operational costs for retailers.
- Bankruptcies: Bankruptcies among retailers are on the rise, contributing significantly to the closure numbers. Companies like Joann, Party City, and Liberated Brands (which owns Volcom and Billabong) are among those that have entered bankruptcy in 2025.
Focus on value: The retail shakeup is also a strategic move by some companies like Walgreens, which is closing underperforming locations to focus on more profitable stores.

4. People slowing their money flow and opting for cheaper items

Status: Accurate. Reports from 2025 indicate that many consumers, particularly lower- and middle-income individuals, are reducing spending and “trading down” to cheaper brands and discount retailers due to economic pressures.

Trading-down trend: Consumer analytics and corporate reports from 2025 confirm a “trading down” phenomenon where shoppers prioritize value. Discount retailers like Dollar General have seen increased traffic, and brands have noted a shift toward lower-priced alternatives.
Cautious discretionary spending: Surveys indicate that many consumers are delaying discretionary purchases like electronics and dining out. While spending on essentials like groceries and gas is less affected, shoppers are more budget-conscious overall.
Uneven impact: While some retailers like Dick’s Sporting Goods report no trade-down among their customers, others, like Kohl’s, confirm it among lower- and middle-income segments. Higher-income consumers generally feel less impact and are more likely to continue discretionary spending.
Savings over spending: Broader economic concerns about inflation and high interest rates have made saving money more appealing for some consumers.

5. “Banks are starting to see Insolvent loans…”

Record household debt: U.S. household debt, including credit card debt, reached new record levels in 2025. Credit card delinquency rates are also climbing, indicating that more people are struggling to make payments.
Debt cancellation programs: The Federal Trade Commission (FTC) has been issuing payments to consumers harmed by fraudulent debt relief programs, and it recently halted a scheme targeting seniors.
No signs of a bailout request: There is no information to support the claim that banks are seeking government relief. As of October 2025, FDIC-insured banks are operating independently, and banking services have not been disrupted, even amid a recent government shutdown

That’s a critically important topic to look at, especially given the current economic environment. Your information is accurate: U.S. consumer debt levels are at all-time highs, and signs of financial strain are increasing.

Here is a breakdown of the latest data from the Federal Reserve Bank of New York’s Quarterly Report on Household Debt and Credit for the end of 2024 and into 2025.

Record Household Debt Levels

The overall level of U.S. household debt has continued its upward trend, setting new records:

Total Household Debt: The aggregate nominal household debt reached $18.04 trillion at the end of the fourth quarter (Q4) of 2024. This figure continued to rise in Q1 2025 and Q2 2025, reaching $18.39 trillion by the middle of the year, driven by increases across almost all loan categories.
Credit Card Debt: Credit card balances reached a record high of $1.21 trillion in Q4 2024. Although balances typically decline slightly in Q1 after the holiday season, they quickly rebounded, with the total remaining elevated at $1.21 trillion as of Q2 2025. This shows that consumers are relying heavily on credit.

Climbing Delinquency Rates

The most concerning part of the data is the rising rate of missed payments, which signals growing financial stress for many American households.

Debt Category	Status as of Q2 2025	Key Trend
Credit Card Delinquency	Serious delinquencies (90+ days past due) reached 12.3% in Q1 2025, the highest level since Q1 2011.	Consumers are increasingly struggling to make minimum payments due to high balances and record-high interest rates (Average APRs are often around 20% or higher for those carrying a balance).
Auto Loan Delinquency	Serious delinquency rates are elevated and are at or above pre-pandemic average levels.	This stress is considered broad-based, affecting borrowers across different credit score and income levels, often due to higher car prices and interest rates.
Student Loan Delinquency	Serious delinquency rates spiked sharply in 2025, reaching 10.2% of outstanding debt in Q2 2025.	This massive jump is primarily due to the resumption of reporting missed federal student loan payments to credit bureaus after a nearly five-year pause that was in effect during the pandemic.

Why This Trend is Important

The combination of record debt and rising delinquencies suggests a strain on household budgets, despite a strong job market. The driving forces include:

Inflation and Cost of Living: Persistent high costs for essentials like food, housing, and fuel are forcing more consumers to rely on credit cards to cover gaps in their monthly budgets.
High Interest Rates: Aggressive interest rate hikes by the Federal Reserve have translated directly into higher borrowing costs for credit cards, auto loans, and mortgages, making debt much harder to pay off.
Student Loan Payment Restart: The end of the payment forbearance period has immediately placed financial pressure on millions of borrowers, leading to a sharp increase in overall delinquency rates.

In short, the data confirms the trend you highlighted: U.S. consumers are utilizing credit at record levels, and for a growing number of people, the rising cost of servicing that debt is becoming overwhelming.

That is the crucial question. When you look at the raw data—record debt and rising delinquencies—it naturally suggests the economy is headed toward a downturn. However, the current economic forecasts are surprisingly mixed, leading to a consensus of “cautious optimism” with significant “pockets of financial strain.”

Here is a breakdown of where economists believe the economy is headed, based on the current debt metrics:

1. Slowdown in Consumer Spending (The Headwind)

The most direct impact of rising debt and delinquencies is a cooling of the powerful U.S. consumer spending engine, which is the main driver of GDP growth.

Weaker Growth Ahead: Forecasts from institutions like Morgan Stanley suggest that nominal consumer spending growth is likely to weaken through the rest of 2025 and into 2026. This cooldown is expected to be most pronounced for lower- and middle-income consumers.
The Squeeze: When a household dedicates a larger portion of its income to paying interest and minimum debt payments, less money is available for other spending. This “debt service burden” is increasing, especially for those with high-interest credit card and auto loan balances.
Two-Tiered Economy: Analysis suggests that spending resilience is being driven disproportionately by higher-income consumers, who still have healthy balance sheets and available credit. Conversely, lower-income consumers are running out of savings and are experiencing much weaker spending growth. This disparity is a key vulnerability for the economy.

2. Low, but Present, Recession Risk

Despite the debt stress, the majority of economic forecasts do not project an imminent, deep recession. Instead, they point to growing risks:

Recession Odds: As of mid-2025, recession risk is often cited by institutions as being low but present, sometimes around a 30% chance through 2026.
The Stabilizing Factor: The Labor Market: The primary reason for cautious optimism is that unemployment rates remain near historic lows. Historically, major financial crises are preceded by a sharp rise in job losses. As long as people are working, most households can continue to service their mortgage and auto debt, keeping the overall system stable.
Bank Perspective: Chief economists from major banks expect real economic growth to continue through 2025 and 2026, though at a slower rate than before. They see the rise in delinquencies, but they anticipate bank consumer delinquency rates will rise only slightly higher than pre-pandemic levels.

3. Delinquencies as a “Compositional Change”

Some analysts argue that the current rise in credit card delinquencies is not a sign of widespread, systemic financial distress across the entire country, but rather a reflection of:

Riskier Lending: During the post-pandemic recovery, some lenders issued credit cards further down the risk spectrum. When adjusted for this riskier borrower profile, the performance of these loans is not necessarily worse than pre-pandemic norms.
Student Loan Distortion: The massive spike in student loan delinquencies is largely a technical correction—the result of the government resuming the reporting of missed payments that had been paused for years. While this is painful for those borrowers, it is a delayed event rather than a new systemic shock.

Summary: Where We Are Headed

The economy is currently navigating a period of disinflationary pressure and slowing growth without immediately tipping into recession. The debt data serves as a flashing yellow light rather than a red one.

The key risk is that the labor market cools faster than expected. If the unemployment rate were to rise significantly, the high levels of consumer debt—especially high-interest credit card and auto debt—would instantly magnify the financial hardship, leading to a much sharper drop in consumer spending and increasing the risk of a full economic downturn.

That’s an excellent question, as the “Two-Tier Economy” isn’t defined by a single, official line, but rather by where economic stress begins to show. The tiers are best estimated by using consumer income percentiles, which clearly separate those who are spending from savings/wealth versus those who are spending from debt.

Based on recent economic analysis from organizations like Moody’s Analytics and various Federal Reserve and BLS reports, the tiers can be estimated as follows:

Estimated Income Tiers in the U.S. Consumer Economy

The split is most often made between the affluent households who still drive growth and the majority of consumers who are facing financial strain.

Consumer Tier	Estimated Household Annual Income (Before Taxes)	Economic Status & Spending Behavior
The Resilient (High-Income)	$150,000+ to $250,000+	Driving the economy. These households typically have substantial savings, built-up home equity, and stock market investments. They continue to spend robustly on discretionary items, luxury goods, and services. The total spending power of the Top 10% of earners (starting around $250,000) now accounts for nearly half of all consumer spending.
The Strained (Lower- & Middle-Income)	Under $100,000 to $150,000	Struggling to keep up. This massive group includes households who are primarily dependent on wages. They have depleted pandemic-era savings and are increasingly relying on high-interest credit cards and auto loans just to cover essential spending (housing, food, and transportation). Delinquency rates for credit cards are concentrated in this group.

How the Tiers Differ

The income bracket is only part of the story; the key difference is where the money goes:

Spending Habit	Lower- & Middle-Income (Strained)	High-Income (Resilient)
Budget Share	A much higher share of income is spent on basic necessities (rent, groceries, gas), leaving very little room for savings or discretionary purchases.	A smaller share of income goes to necessities, allowing for high spending on discretionary items (travel, dining, entertainment, new cars, etc.).
Debt Usage	Using credit cards for necessity spending (e.g., buying groceries). Balances are high, and more users are making only minimum payments.	Using credit cards for convenience or large luxury purchases, often paying off balances in full or having access to lower-interest debt.
Economic Vulnerability	Highly vulnerable to a job loss or unexpected expense, which quickly translates into a missed payment or default.	More insulated from economic shocks, often having the ability to tap into investment portfolios or home equity.

Essentially, the economy is resilient at the top because high-income earners have the financial cushion to keep spending, masking the rising financial difficulties experienced by the majority of consumers below that top-tier threshold.

That is one of the most widely discussed financial claims in American politics, and the answer depends entirely on how the term “trillions” is being defined.

When the claim of the U.S. collecting “trillions of dollars” is made, it is generally based on two primary interpretations, which differ significantly from official government accounting:

1. The Literal Collection of Tariffs (Actual Revenue)

The claim of trillions does not match the money the U.S. government has actually collected in tariffs so far.¹

Current Reality (Billions): According to U.S. Treasury data for the current year (2025), the federal government has collected hundreds of billions of dollars in tariff revenue since the aggressive new policies were implemented. While this is a substantial increase over previous years (with recent months seeing over $30 billion in collections), it is still in the hundreds of billions, not trillions.²
The “Trillions” Projection (Over a Decade): The claim of “trillions” often refers to the projected revenue that the current tariff policies are expected to generate over a much longer period, such as 10 years.³ For example, the non-partisan Congressional Budget Office (CBO) and other analysts have estimated that the cumulative tariff revenues over the next decade could total between $2.1 trillion and $2.8 trillion.⁴ The administration has sometimes cited projections that are even higher.
Location of the Money: All customs duties (tariffs) collected by the U.S. Customs and Border Protection go directly into the U.S. Treasury’s General Fund.⁵ This is the same fund that receives income taxes, corporate taxes, and all other federal revenue.⁶ From there, Congress appropriates the money for all federal expenses, such as the military, Medicare, and interest on the national debt.⁷

2. The Claim of Investment (“Trillions in Investment”)

President Trump has sometimes used “trillions” to refer to investment rather than direct tariff revenue.⁸

He has claimed that his policies, including tariffs, have spurred an increase in foreign and domestic investment or “commitments” to move business and jobs back to the U.S., sometimes citing figures as high as $17 trillion.⁹
Economist Perspective: This figure of $17 trillion is widely disputed by economists, as it is more than double the entire U.S. annual Gross Domestic Product (GDP). ¹⁰Economists argue that this figure represents highly exaggerated or unverified estimates of investment commitments, not physical money collected by the government.

The Bottom Line: Billions vs. Trillions

In practical terms:

Actual Money Collected: The U.S. has collected hundreds of billions of dollars in increased tariff revenue, and this money goes into the Treasury’s General Fund.¹¹
The Source of the Claim: The trillions figure is based on either 10-year projections of future tariff revenue or a broader claim of foreign investment commitments spurred by trade policy.