The Secret Recession: Why Even Wealthy Americans Are Drowning in Debt

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In this episode of Watchdog on Wall Street, we break down the troubling rise in delinquencies—not among the poor, but among high-income Americans. When people making $150,000+ can’t pay their bills, you know the cracks are deep.
Here’s what you’ll hear:

• Why upper-income earners are defaulting on credit cards and auto loans
• What the Fed can’t fix, no matter how much it cuts rates
• The myth of “high” interest rates—and the real driver of economic pain
• How broken inflation math hides what’s really happening to your wallet
• Why GDP growth means nothing if your life still feels like a recession

Forget the headlines. This economy is weaker than Washington wants to admit.

Episode Transcript

Speaker 1 (00:00):
The Watchdog on Wall Street podcast explaining the news coming
out of the complex worlds of finance, economics, and politics
and the impact it we'll have on everyday Americans. Author,
investment banker, consumer advocate, analyst, and trader Chris Markowski.

Speaker 2 (00:16):
Not surprised at all. We're seeing some economic cracks when
we've been seeing economic cracks for some time showing up
now with high earners out there, upper income Americans falling
behind on credit card in auto loan payments a bit
of a problem. Delinquencies on such debts making at least

(00:37):
people making at least one hundred and fifty thousand dollars annually,
has jumped almost twenty percent over the past two years,
faster than for middle or lower income bowers. Recent study
Federal Reserve Bank Saint Louis found that the share of
people making late card payments in the highest income zip
codes has risen twice as much over the last year

(01:00):
as in the lowest income zones. Again, what does this mean?
What does this mean for the Federal Reserve this week?
I don't know. Again, it's hard to tell what they're
exactly looking at. I really don't know, but I think
that quite frankly, the underlying economy, without a doubt, has
been showing some serious weakness, no doubt about it in

(01:23):
my mind at all. An you're taking a look at
some of these things, and they keep pointing to the fact.
They're saying that interest rates are high. All these economists
out there, Mark Zandy, and they keep Federal Reserve keeping
interest rates high. They're not that high. And to be
quite honest with you, you're talking about you know, credit card debt,

(01:46):
auto loans, that stuff you refinance. Did you really think
that the FED lower's rates, let's say the fedlower's rates
by one hundred basis points. Do you think that your
credit card rates are coming down by that much? You
got some adjustable rate on your auto loan? You're going
to try to refinance that? I don't know. Okay, again,

(02:10):
this this is something that people people are getting hit
with right now. All around the country. There there's more
and more signs of weakness. And again I wish, quite frankly,
I wish the administration was a little bit more honest

(02:31):
about that. You know, if you're coming and you're you're
banging the FED on top of his head, and I
know Trump can't do that he should have done that
right off the bat in the early part of his term, saying, listen,
we're you know, we're dealing with a really really weak
economy here. Moving forward, We've got a lot of work
we've got to do. You can't come out and audibly say, Okay,

(02:52):
I'm going to step in the White House and everything
is going to be just awesome, and everything is going
to get better and prices are going to come down
and the economy is just going to start moving and
grooving again. It's not. We've talked about a myriad of differences.
We talked about youth unemployment, unemployment with kids coming out
of college at this point in time, all of these

(03:13):
things add up again tying this into the Federal reserve
in interest rates, the overall strength of the economy. Yeah,
I think that the Fed more than likely should start
lowering rates. They're going to do it. It's going to
be little by little. It's not going to be right away.
To think that this is actually going to be some

(03:34):
sort of magic elixir. It's not. It's not. Yeah, it's funny.
We talked about this here on the program. The interest
rate that matters, And the funny thing is We've been
talking about this for how long. All of a sudden,
some of the business papers are picking up on this,
the fact that, hey, doesn't matter. It doesn't matter if

(03:54):
the Fed lowers rates, if the ten year, if the
bond and the tenure bond goes in the opposite direction,
all bets are off. And that's what happened this past fall.
There has to be confidence in what the Federal Reserve
is doing. It also has to be confidence in our
fiscal situation here as a country. Automatically just going out

(04:17):
there and dropping rates. Federal Reserve not not gonna, not
gonna cut the mustard. It's not gonna help these people
out that are behind on their bills, that having a
difficult time. Whether you know we're hearing it now. Uh,
Auto loan delinquencies, credit card delinquencies, all going on the
the upswing. Okay, might we have to deal with some pain? Yeah? Yeah.

(04:42):
The Fed can't fix this force. Quite frankly, Donald Trump
can't fix this force. We need to get out of
the way. Economy's got to start moving and grooving and
building again. They keep talking about GDP growth. We might
not see a recession this year. That might be the case.
Might be the case, but it also you know, doesn't

(05:04):
matter to someone who feels like they're in a recession.
We have this this obsession, the obsession in this country
with measuring GDP growth government numbers, and this adherence to
them like that they you know, like I said, it's
like Moses. Moses had brought them down on tablets. I

(05:25):
don't buy it, quite frankly, I really don't. I don't
buy government numbers. Have it for some time. So again
the Fed's position weakening economy. Also, you know what he knows,
he knows inflation is actually much higher than they're actually reporting. Again,

(05:50):
play with you know, play with AI, play with some
you know GROCK or chat GPT and calculate for yourself.
Calculate for yoursel do some homework on the changes that
were made to government calculations when it comes to inflation
and CPI. If we were using the same formula, the

(06:10):
same numbers that Paul Volker used back when he was
in charge of the FED, the last good Federal Reserve
chairman that we had, in my opinion, we'd have inflation
easily up near eight nine ten percent and around that
range with out a doubt. Again, government will tinker with numbers.

(06:32):
It's it's their numbers, and everybody on Wall Street abides
by their numbers. Algorithmic trades are set up based upon
these very numbers, but again, does it mean anything to you?
And I actually in the real world, not really watchdog
on wallstreet dot com