Consumer credit at the limit

Frictions it intensifies

These pressures get worse, or reach more people.

• Revolving credit compounds against the borrowerEarly adulthood
• Debt that arrives before the income doesEarly adulthood
• Lose the home if income dropsHousehold formation
• Divide shared expenses fairlyHousehold formation
• The state takes a share every year and must be told exactly whatAcross every phase
• Pay, get paid, and send money to familyAcross every phase
• The family must sometimes eat without cookingChildhood

Solutions it accelerates

• Debt consolidation and balance transfersEarly adulthood
• Credit counsellingEarly adulthood
• Budgeting and bill-split appsHousehold formation
• Income-driven repayment and forgiveness programmesEarly adulthood

Solutions it threatens

• Buy-now-pay-laterEarly adulthood
• Starter and secured credit cardsEarly adulthood
• Auto loans and leasesEarly adulthood
• Family and casual-dining restaurantsChildhood
• Cosmetics and beautyEarly adulthood
• Second homes, timeshares, and vacation rentalsMidlife
• Beer, wine, and spiritsEarly adulthood

Sectors it reshapes

• Banking and consumer credit$4.5T
• Transport and mobility$2.2T
• Food and grocery$6.7T

How to track it

If this trend is real, these are the numbers that will show it first.

• Subprime auto and credit-card delinquenciesTier 2
• Consumer credit and delinquenciesTier 2
• Student loan repayment and delinquencyTier 4
• The K-shaped consumerTier 3

Companies it favours

• WalmartWMT · $800B
• CostcoCOST · $450B
• Dollar GeneralDG · $25B

Companies it pressures

• Capital OneCOF · $130B
• Bajaj FinanceBAJFINANCE · $70B
• CarvanaCVNA · $60B
• Synchrony FinancialSYF · $25B
• AffirmAFRM · $20B
• KlarnaKLAR · $15B
• Ally FinancialALLY · $12B
• OneMain FinancialOMF · $7B
• UpstartUPST · $5B