Merry Christmas:
On part 1 you read how the current market is held up by flush consumer cash and money market. Part 2 you will see how it is more fragile than you think.
Saving rates collapse:
The K-Shaped recovery is turning into a K-Shaped exhaustion.
Personal Saving Rate has fallen to 4.7% as of September 2025, with the 2025 year-to-date average sitting even lower at 4.4%.
This is historically dangerous territory. In the 1970s, this rate averaged 11.7%. We are currently saving at less than half the rate of previous generations.
Consumers are maintaining their lifestyle (retail sales growth) not by earning more, but by saving less. This is mathematically unsustainable. When the savings rate hits 0%, spending must contract.
Credit Stress:
The Data: While the aggregate credit card delinquency rate is ~3.0% (Sept 2025), specific pockets are flashing red.
Serious delinquency rates in low-income zip codes have surged past 20% in 2025, a level of stress comparable to the 2008 crisis for that specific demographic.
The bottom 50% of earners have burned through their pandemic savings and are now maxing out leverage to survive inflation. The "average" is fine, but the foundation is rotting.
The Yield Curve Signal (10Y-2Y Spread):
The 10Y-2Y Treasury spread is now positive, sitting at +0.68% as of December 19, 2025 (10Y at 4.16%, 2Y at 3.48%).
The curve was inverted (negative) continuously from July 2022 to August 2024.
Historically, the recession doesn't start when the curve inverts; it starts when it un-inverts (snaps back to positive) as the market demands Fed cuts. We are currently in that "snap back" danger zone.
We are in a bull market.
However this bull is exhausted. It is a porcelain bull. Fragile.