TAPPED OUT: Americans Are Falling Behind on Their Bills. Wall Street Is Alarmed.

Shares of consumer-lending companies slid this past week after executives raised warnings about lower-income borrowers who are struggling to make payments. Dour remarks from banking executives at the Barclays banking conference rattled investors, who were already on edge about the health of the U.S. economy.

Investors have been on high alert for any clues that a recession is in store after two years of higher interest rates. The Federal Reserve is expected to start lowering rates at its meeting this coming week, but some investors fear it might have waited too long.

Here is what bank executives are telling us about how people are faring.

On top of soaring prices for groceries and just about everything else, people have been dealing with higher interest rates on their credit cards. The average rate as of May was 21.51%, according to Fed data, up from around 15% in 2019.

That helps explain why some are finding it harder to keep up with payments, particularly those who don’t earn so much. Around 9.1% of credit-card balances turned delinquent over the past year, the highest rate in over a decade, according to an August report from the Federal Reserve Bank of New York.

The stories began over two years ago that inflation had run through our lockdown savings. Then came the stories a year or so ago that credit card debt and housing payments had hit new highs. So of course the next in the sequence was delinquencies.

Anyone taken by surprise can’t be trusted with anything more complex or breakable than Lincoln logs.

UPDATE (FROM GLENN): Then there’s the gaslighting.