It feels like someone has pulled a plug, because the U.S. economy is suddenly caught in an extremely alarming downward spiral. As I discussed at the end of last week, investors are flocking to gold and silver because they can see that a storm is coming. We have reached a point where most of the country is experiencing significant economic pain, and as a result people are starting to get really careful with how they spend their money. The cost of living crisis has caused most of us to tighten our belts, defaults are absolutely soaring, and food bank lines are getting even longer. If conditions continue to deteriorate like this, what will 2026 look like?
Our economic momentum has been causing us to slide in the wrong direction for years, but now that slide threatens to become an avalanche. The following are 14 signs that the condition of the U.S. economy is worse than you think…
#1 According to a brand new survey that was just released, Americans plan to spend far less during this holiday season than they did last year…
The survey showed that consumers intended to spend an average of $1,595 this holiday season, which is over 10% less than the $1,778 they had planned to spend last year. The lower expected spending holds across all household income groups and most generations, but was particularly acute among younger shoppers.
Gen Z consumers, who were represented in the survey by individuals between the ages of 18 and 28, revealed that they plan to spend 34% less this holiday season compared to 2024. Millennials, respondents between the ages of 29 and 44 in the poll, said they plan to spend 13% less, on average.
#2 As the holiday season approaches, we are starting to get reports of “empty shelves” in some parts of the nation…
Several people echoed Michele’s feelings about availability, describing the situation as “empty shelves, higher prices”. Natalie, who lives in New Hampshire, said she hasn’t seen certain pantry staples “for months”. She said: “The store shelves have become more and more bare … instead of multiple choices there may only be one or two, and name brands are being replaced by store brands.”
#3 Household debt has reached an all-time record high of 18.4 trillion dollars, and debt collectors are becoming a lot more aggressive…
U.S. households now owe a record $18.4 trillion in debt, and federal data shows complaints about aggressive debt collection have surged over the past year.
The Federal Trade Commission logged over 140,000 consumer complaints about debt collection in the second quarter — a 220% jump from the same period a year earlier. Georgia, Texas and Florida recorded the highest rates.
#4 According to a report that was recently posted by Zero Hedge, auto loan delinquencies have been absolutely soaring…
A month after bankruptcies of subprime auto lender Tricolor and auto-parts supplier First Brands, new cracks emerged in U.S. credit markets. This week, Zions and Western Alliance disclosed they were victims of loan fraud tied to funds investing in distressed commercial real estate. The revelations come amid broader credit trouble, and shifting our focus back to autos, there’s new data this morning about credit products tied to the riskiest consumers that have seen a 50% surge in delinquencies.
Bloomberg cites data from the credit-scoring company, VantageScore, which reveals that delinquencies among the low-tier consumers have surged 50% since 2010. Fueling the delinquencies is a perfect storm of record-high car prices, elevated interest rates, longer loan terms, and monthly payments that average nearly as much as rent for some folks.
Since 2019, new vehicle prices have jumped over 25% to $50,000, while average monthly payments reached $767, with 20% of borrowers paying over $1,000 per month. Loan rates now exceed 9%, worsening the affordability crisis.
#5 Are we on the verge of a new banking crisis? Thanks in part to the turmoil that we have been witnessing in the auto industry, some regional bank stocks plummeted last week…
Shares of regional banks and investment bank Jefferies tumbled on Thursday as fears mounted around some bad loans lurking on Wall Street.
Zions Bancorporation dropped more than 13%, while Western Alliance Bancorp fell more than 10%. The SPDR S&P Regional Banking ETF (KRE) lost more than 6%, with all but one member of the popular fund ending Thursday’s session in the red.
The bankruptcies of two auto industry-related companies this year have raised concerns about loose lending practices, especially in the opaque private credit market. That’s left both the banking industry and investors concerned about whether instances of loans gone wrong indicate a burgeoning crisis.
#6 Millions upon millions of Americans are seriously behind on their student loan payments…
Roughly 5.3 million borrowers are in default and another 4.3 million borrowers are in “late-stage delinquency,” or between 181 and 270 days late on their payments, according to a separate analysis last month by the Congressional Research Service based on data from the Education Department. Payments 270 days past due are considered in default.
With so many borrowers already seriously delinquent, “if these borrowers do not start paying soon, defaults will meaningfully rise,” Moody’s Analytics economist Justin Begley told CNBC.
#7 The lines at our food banks are getting even longer. In fact, in some areas people are actually spending multiple hours in line just for a chance to get some food…
By the time the Pilsen Food Pantry opened on a recent morning, Ulysses Moreno had been there for two hours — with a line of people behind him that snaked around the corner.
“This is a lifeline for me,” said Mr. Moreno, 39. He had lost his construction job a few days earlier, and with three teenagers at home, he wanted to make sure he could stock up. “Our food budget doesn’t stretch as far as it used to.”
#8 Approximately 62 percent of U.S. workers say that the cost of living is rising faster than their paychecks…
Nearly two-thirds of workers (62%) say their income hasn’t kept pace with rising expenses over the past year — the highest share in four years, according to a new Bankrate survey. In 2022, 55% said the same.
#9 Electricity prices have been rising “more than twice as fast as overall inflation”…
The cost of electricity is rising more than twice as fast as overall inflation, turning a basic household necessity into a growing financial burden.
In August, electricity prices jumped 6.2% from a year earlier and are now up more than 30% over the past four years, according to the Consumer Price Index.
That rise has hit families hard and presents a political challenge for the administration.
#10 Close to half of all restaurants anticipate that they will soon be forced to raise prices even higher…
Nearly half of all 712 restaurant decision-makers surveyed (48%) said they plan to increase menu prices if inflation continues to be a factor.
The National Restaurant Association estimates that, to maintain a 5% profit margin, the average restaurant needs to raise prices by 31%, according to data compiled by the D.C.-based industry trade group earlier this year.
#11 We haven’t seen Americans cook meals at home at this rate since the lockdowns of 2020…
More Americans are cooking at home and turning to ingredients that stretch their food budgets, a potential warning sign for the U.S. economy.
American soup and snack maker Campbell’s recently saw the highest level of meals cooked at home since early 2020, CEO Mick Beekhuizen said on an earnings call this week.
#12 Thanks to our trade war with China, U.S. farmers are facing the worst downturn that they have experienced in about 50 years…
Across the Midwest, combines sit idle and bins overflow with unsold grain. Corn prices are down nearly 50% since 2022. Soybeans have dropped 40%. Fertilizer and equipment costs are up double digits. And 8 in 10 farmers now say they believe the U.S. is on the brink of another farm crisis reminiscent of the 1980s. They’ve even given it a name: Farmageddon.
#13 According to Gallup, 60 percent of U.S. workers do not have a “quality job” at this stage…
A majority, 60%, of U.S. workers don’t have a “quality job” that provides basic financial well-being, safety and other factors, according to new Gallup research that covers more than 18,000 workers across industries, occupations and types of employment.
#14 According to a stunning survey that was recently released by PNC Bank, a whopping 67 percent of all workers in the United States are now living paycheck to paycheck.
#15 We continue to see mass layoffs all over the nation. For example, Paramount just announced that it will be eliminating approximately 2,000 jobs…
Paramount Skydance will begin mass layoffs the week of October 27, eliminating around 2,000 U.S. jobs as part of a $2 billion cost-cutting plan under new CEO David Ellison, Variety reported on Saturday.
#16 The gap between the wealthy and the poor just continues to grow. At this point, the top 10 percent “account for nearly half of all spending”…
The top 10 percent of U.S. households now account for nearly half of all spending, Moody’s Analytics recently estimated, the highest share since the late 1980s.
#17 The financial markets have started to shake, and that is really bad news because leverage in the stock market is at an all-time high…
Leverage in the stock market has been spiking since April. In September, margin debt – the amount investors borrowed from their brokers – spiked by another 6.3%, or by $67 billion, from August to a record $1.13 trillion.
#18 57 percent of Americans expect the economy to get even worse over the next year. That figure is 27 percent higher than it was last year…
An annual survey from Deloitte revealed that most U.S. consumers expect the economy to weaken in the year ahead.
According to a survey of roughly 4,000 people published on Wednesday, 57% of respondents expect the economy to soften over the coming 12 months, the highest level ever recorded since Deloitte began tracking the sentiment in 1997. This represents a 27-percentage point jump from the 30% registered during the same time last year, and is even higher than the 54% seen in 2008, during the Great Recession.
It is very rare for Americans to be this pessimistic about the economy.
But the truth is that the vast majority of the population still has no idea just how bad things will eventually get.
Our leaders have been making catastrophically bad decisions for decades, and now the consequences of those catastrophically bad decisions are starting to catch up with us in a major way.
This generation was handed the keys to the greatest economic machine in human history, and we wrecked it.
We have piled up colossal mountains of debt, we have destroyed the value of our currency, and we have absolutely eviscerated the middle class.
Now virtually every pillar of our economic prosperity has started to crumble, and it is just a matter of time before the entire system completely collapses.
Michael’s new book entitled “10 Prophetic Events That Are Coming Next” is available in paperback and for the Kindle on Amazon.com, and you can subscribe to his Substack newsletter at michaeltsnyder.substack.com.
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