US ECONOMY: Consumer Credit Overtakes $5 Trillions in High Vertical – The "Strong Consumer" is a Leafly Lie PREMIUM

[Igor Pereira]

There's something terrifying going on in the heart of the United States economy, hidden beneath the surface of the euphoria of the stock market. The most dangerous chart today is not that of national debt or government spending, but that of consumer credit.

By Igor Pereira, Financial Market Analyst, Junior Member WallStreet NYSE

Recent data show that money borrowed by ordinary citizens to survive has reached an unprecedented vertical trajectory. After decades of slow and natural growth, the curve tilted dangerously after 2008 and became a straight line after 2020. Now, we're sitting on a pile of more than $5 trillion In consumer debt, the highest level in American history.

Survival, No Luxury: The Truth About Swipe

The predominant narrative in the financial media that the American consumer is "strong" and resilient is a dangerous fallacy. The reality revealed by this graph is that Americans are not in debt to buy luxuries or boost lifestyle; they are taking loans to surviving inflation. Credit cards are being used to pay rent, supplies, medical bills and car repairs because the real wages did not follow the cost of living. The explosive increase in the use of "Buy Now, Pay Later" services (Buy Now, Pay Later) for basic expenses and the jump in default rates (the fastest since the 2008 Financial Crisis) are irrefutable evidence that the consumer is not spending by choice but by lack of option.

Maximum Leverage and Demand Collapse

The systemic danger lies in the fact that consumption represents 70% of the US GDP. When consumer credit becomes parabolic, the end is never smooth. People borrow it until they reach the mathematical limit of their ability to pay. When this ceiling is hit — and we are dangerously close — the result is an immediate collapse of demand, followed by waves of captions, layoffs, and recession. This graph shows no economic growth; it shows accumulated pressure. We're watching the pile of financial despair, not prosperity.

This chart may be the most important warning signal of 2025. The spending engine that sustained the American economy for 30 years is about to stop. When consumers "max out" (at the limit), dry liquidity and the real economy stop. For us investors, this signals that the next phase will not be "soft landing", but a credit crisis that will force the Fed to intervene with emergency measures. Get ready, because when leverage breaks, volatility will be extreme.