A guest reveals the severe, cascading costs of a poor credit score (in the 400-500 range). Beyond loan denials, it functioned as a tax on his life, inflating his car loan interest rate to a staggering 28% and significantly increasing his monthly insurance premiums for the same coverage.

The Fed kept interest rates higher for months due to economic uncertainty caused by Donald Trump's tariff policies. This directly increased borrowing costs for consumers on credit cards, car loans, and variable-rate mortgages, creating a tangible financial impact from political actions.

Scott Goodwin highlights that while major banks report stable consumer credit, they overlook the explosive growth of online lenders like Upstart and SoFi. This hidden leverage, often ending up on insurance company balance sheets, means the US consumer is far more indebted than traditional metrics suggest.

Despite a 9.1% year-over-year increase in nominal sales, Black Friday data reveals consumers bought 4.1% fewer items and dramatically increased their use of "Buy Now, Pay Later" services. This indicates that inflation, not strong consumer health, is driving top-line revenue growth for corporations.

The credit market appears healthy based on tight average spreads, but this is misleading. A strong top 90% of the market pulls the average down, while the bottom 10% faces severe distress, with loans "dropping like a stone." The weight of prolonged high borrowing costs is creating a clear divide between healthy and struggling companies.

Recent stress in credit card and auto loan markets is concentrated in loans originated in 2021-2023 when stimulus and looser standards prevailed. Lenders have since tightened, and newer loan portfolios are performing better, suggesting the problem is not spreading systemically.

The dramatic rise in BNPL usage across all demographics, including 41% of young shoppers, is a negative forward-looking indicator. While framed as innovation, it's a form of modern usury that reveals consumers cannot afford their purchases, creating a significant, under-discussed credit risk for the economy.

An alternative data point from Equifax reveals significant economic stress. The delinquency rate for subprime auto loans (borrowers with scores below 660) has reached 10%, a level higher than that observed during the 2008-2009 global financial crisis, signaling trouble for lower-income households.

In a highly concerning paradox, delinquency rates for subprime auto loans are now higher than they were during the 2008 financial crisis when unemployment was 10%. This signals extreme stress among lower-income consumers even in a strong labor market.