Americans have been hit by high inflation and are worried about their jobs. Will they show up at stores on Black Friday? 

While richer Americans have strong finances, the working class is struggling. We’re seeing it everywhere from food lines to loan defaults. 

Inside the Other America

“I’ve never seen lines like that for food. There were hundreds of people.”

My cousin, who works at a food pantry, was telling me about her work over Thanksgiving dinner yesterday. During the government shutdown, demand for food aid went through the roof. 

It’s a window into a world I rarely see. Maybe you don’t either. 

But it’s out there. And it’s beginning to show up in the economic statistics.

Kitchen Table Worries

Americans are deeply concerned about inflation. They’re also beginning to worry about their jobs.

The University of Michigan’s consumer sentiment survey has fallen to its lowest levels in over three years. Among people aged 18 to 34, about one-third think they may lose their job in the next five years.

If you’re worried about your job, you’re going to cut spending on extras. And on Black Friday, that’s what retailers are selling. 

The Working Class Defaults

Americans of all social classes are beginning to worry about the economy. But for the working class and poor, those worries are all too real. 

Subprime auto loan delinquencies have hit their highest levels ever. As expenses for housing, health care, and groceries have risen, poor consumers are beginning to default in large numbers. 

Overall, delinquencies for credit card and auto loans are at their highest since the financial crisis. Those delinquencies are concentrated in poor neighborhoods.

At a time of low unemployment and rapid economic growth, Americans are defaulting on loans as if there were a severe recession. 

The Resilient Wealthy

Strangely enough, overall household debt is low. Consumer debt as a percentage of GDP has fallen steadily since the 2008 financial crisis. 

Total consumer spending has held up as well. Much of this is driven by wealthier Americans. 

In order to see the stress among American consumers, you have to zoom in. 

The wealth gap in our country has gotten severe enough that overall economic statistics only tell us so much. Strength at the top masks serious weakness at the bottom. 

Wrap-Up

The rich and poor in America today might as well be living in different countries.

For the fortunate like me, the economy is great. Stocks are high and AI spend is putting lots of money in our pockets. Inflation is a minor annoyance.

But working-class people are at the end of their rope. 

Rich people’s spending can power America’s economy for a while. But as more people struggle, this boom could soon turn to bust. 

More on markets: 

Why German Industry Is Failing

Janesville — Or Why AI Will Be a Disaster for Jobs

The End of Human Food Delivery

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