What the Parking Lot Tells Us About Consumer Stress

Let's kick the tires on the latest household debt data. Total debt grew a moderate 1% in Q3 2025, hitting $18.59 trillion. That's a steady climb, not a sprint. The largest chunk remains mortgages, which added $137 billion to reach $13.07 trillion. On the surface, that looks stable. But the common-sense question is: where is the real stress showing up? The numbers suggest it's not a broad collapse of consumer spending, but a more targeted strain.

The critical metrics tell the story. First, look at credit cards. Delinquencies have been elevated, showing a persistent strain on household budgets. The data shows the incidence of credit card delinquencies has continued rising, and this isn't just a few outliers-it's a broad trend across different income groups and geographies. That's a red flag for household budgets.

Then there's auto loans. This is where the pain is sharpest for a specific group. While overall auto loan balances held steady, delinquencies picked up for lower-income households in the third quarter. In fact, the rise for this group was the largest jump since early 2024. That's a clear signal that financial pressure is hitting those with less room to absorb shocks.

So the smell test passes for the overall picture: debt is growing, but not wildly out of control. The real stress is concentrated. It's in the credit card balances that keep rising, and in the auto loan delinquencies that are spiking for lower-income borrowers. This isn't a sign of a consumer spending spree ending; it's a sign of budget strain in specific, vulnerable corners.

Kick the Tires: What We See in Stores and on the Road

Let's do a real-world smell test. The financial data shows debt stress, but what's happening on the ground? Is the parking lot full or empty? The answer points to a clear split in consumer behavior.

First, the visitation data tells a story of a two-tier economy. Our retail traffic trends show a sharp divergence. Affluent shoppers, buoyed by the wealth effect from strong markets and rate cuts, are spending confidently. They're driving traffic to luxury department stores, specialty grocers, and fine-dining restaurants. That's the resilient tier. The other side is a cautionary tale. Lower- and middle-income households are pulling back, trading down to dollar stores and warehouse clubs as they grapple with cost-of-living pressures. This isn't a broad retreat; it's a targeted shift in spending patterns.

Then there's the classic "lipstick effect" in action. Despite high inflation and a pessimistic mood, a notable portion of consumers planned to splurge on small indulgences. Research shows 39% of consumers expressed their intent to splurge on a range of categories during the 2025 holidays. This is the common-sense signal of a consumer who can't afford a big-ticket item but still wants a little treat. It's a sign of psychological resilience, not financial strength.

But the overall spending engine is sputtering. Real consumer spending growth was soft in June, and the trend is expected to slow further. Goldman Sachs Research notes real consumer spending increased by 0.1% month over month in June and forecasts only 1.0% growth for the full year. That's a significant deceleration from the 2.3% real income growth seen in 2024. The bottom line is that while some are spending, the broader economy is under pressure, and the savings rate is stuck at a modest 4.5%.

Viewed another way, the parking lot tells a mixed story. For the wealthy, it's full. For the budget-conscious, it's a lot more crowded with value shoppers. The real-world utility of that wealth effect is clear, but it's not enough to power a broad-based expansion. The setup for the second half of the year is one of soft growth, not a rally.

The Bottom Line: Who's at Risk and What Could Break

The common-sense view is clear: the consumer isn't broken, but the stress is narrow and targeted. The real-world utility of that wealth effect is helping the affluent, but it's not enough to lift everyone. The key metrics point to two specific vulnerabilities and one evolving risk.

First, the stress is concentrated. It's not a broad-based spending freeze. The data shows the incidence of credit card delinquencies has continued rising broadly across the country, a sign of persistent budget strain. More specifically, auto loan delinquencies picked up for lower-income households in the third quarter. This is the clearest signal of where financial pressure is hitting hardest. The bottom line is that the strain is in the credit card balances that keep rising and in the auto loan delinquencies that are spiking for those with less room to absorb shocks.

Second, consumer sentiment is deteriorating. The Conference Board's Consumer Confidence Index fell for a fifth straight month in December, hitting 89.1. The Present Situation Index plunged, and the Expectations Index has now tracked under 80 for 11 consecutive months. That's a critical threshold that signals recession ahead. Pessimism about jobs and income is deepening, which is a red flag for future spending.

So what could break? The key watchpoint is whether auto loan stress spreads beyond lower-income groups. If that delinquency trend broadens, it would signal a more systemic problem. At the same time, we need to monitor how this "two-tier" spending pattern evolves. The affluent are still spending, but if their confidence wanes or if the cost-of-living pressures intensify for the middle class, the entire spending engine could sputter further.

The setup is one of soft growth, not a rally. The parking lot is full for some, but the overall traffic is slowing. Keep it simple: the risk is that targeted stress becomes more widespread, and consumer confidence continues its downward slide.