40% of Americans Have Under $500 Saved. Vegas Feels It.
Jeremiah Babe's latest breakdown paints a grim picture of consumer finances, and the data actually backs him up
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Here is a stat that should ruin your brunch: nearly 40% of Americans have less than $500 in savings. Not $500 left after bills. $500 total. That is not a TikTok doompost, that is the backdrop against which Jeremiah Babe just dropped one of his more data-dense consumer stress videos, and honestly, the numbers are hard to wave away.
The headline figures are stacking up. 4.3 million Americans are currently behind on auto loans, with somewhere between 2.5 and 3 million vehicle repossessions expected this year. Credit card debt has ballooned to $1.25 trillion with a 13% delinquency rate. And 35 million Americans are on food stamps. This is not a single warning light on the dashboard. This is every light, plus a weird smell.
The Las Vegas angle is where it gets interesting as a market signal. Babe points to 3.1 million fewer visitors to Vegas this year, arguing that the experiential economy, the last great pillar of post-pandemic consumer spending, is finally feeling the squeeze. His thesis: a huge chunk of discretionary spending has been floating on credit cards and buy now pay later services, and that float is running out. When 78% of people live paycheck to paycheck, Vegas trips funded by Affirm are not a sign of resilience. They are a delayed reckoning.
The broader implication hits consumer-facing stocks hard. Companies like $MGM and $WYNN have priced in a durable leisure consumer that may be more credit-dependent than their earnings calls suggest. Credit spreads, as Andrei Jikh separately noted in his AI bubble series, are not always a reliable early warning system. The same logic applies here: by the time delinquency rates show up cleanly in quarterly filings, the damage is already done upstream.
The bull case for consumer stocks is that employment is still holding (the July jobs report showed unemployment dipping to 4.1%), and inflation is forecasted to fall to a five-year low of 2.4% core CPI according to Bloomberg Economics. Lower prices could relieve some pressure. But relief for someone with $400 in savings and a car payment 90 days late tends to arrive a little late.
The consumer was supposed to be the economy's shock absorber. Turns out the shock absorber has been running on borrowed money, and the bill is coming due one repo at a time.