Consumers Got the Memo

Although consumer debt is at an all-time high, consumers themselves got the message during the last crisis: Pay down debt, own more assets.

That’s taken the U.S. household debt-to-asset ratio to levels last seen in the 1970s, around the time the U.S. went off the gold standard:

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Households, unlike government, have paid down their debt and benefited from rising asset prices (Source: FRED)

Contrast that with government. The U.S. government, still enduring its longest “shutdown” ever, managed to grow its debt by half a trillion dollars – while its doors were officially closed!

Rising government debt, moreso relative to GDP than the total value, is on the precipice of full-blown crisis level. When the government gets into trouble, households need to be prepared.

We expect the end of AI buildout euphoria in the stock market may be the catalyst. What you can do right is get your own financial house in order. Pay off debt. Own hard assets. Don’t borrow to invest in the stock market.

~ Addison

P.S. We’ve invited Bloomberg’s #1 employment analyst Andrew Zatlin, to join us tomorrow on Grey Swan Live! for obvious reasons:

Andrew Zatlin — the #1-ranked economic forecaster on Bloomberg and one of the most connected data minds in finance.

For decades, Andrew has helped billion-dollar hedge funds stay three steps ahead of Washington’s chaos, consumer shifts, and global supply chain shocks.

As unemployment ticks up, politicians trade on insider intel, and Pelosi closes out an era, he’ll reveal what his data is signaling next — and what investors should prepare for.

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.

Although consumer debt is at an all-time high, consumers themselves got the message during the last crisis: Pay down debt, own more assets.

That’s taken the U.S. household debt-to-asset ratio to levels last seen in the 1970s, around the time the U.S. went off the gold standard:

Turn Your Images On

Households, unlike government, have paid down their debt and benefited from rising asset prices (Source: FRED)

Contrast that with government. The U.S. government, still enduring its longest “shutdown” ever, managed to grow its debt by half a trillion dollars – while its doors were officially closed!

Rising government debt, moreso relative to GDP than the total value, is on the precipice of full-blown crisis level. When the government gets into trouble, households need to be prepared.

~ Addison

P.S. We’ve invited Bloomberg’s #1 employment analyst Andrew Zatlin, to join us tomorrow on Grey Swan Live! for obvious reasons:

Andrew Zatlin — the #1-ranked economic forecaster on Bloomberg and one of the most connected data minds in finance.

For decades, Andrew has helped billion-dollar hedge funds stay three steps ahead of Washington’s chaos, consumer shifts, and global supply chain shocks.

As unemployment ticks up, politicians trade on insider intel, and Pelosi closes out an era, he’ll reveal what his data is signaling next — and what investors should prepare for.

If you have requests for new guests you’d like to see join us for Grey Swan Live!, or have any questions for our guests, send them here.

Estimates now indicate that the average consumer will default on a minimum payment at about a 15% rate – the highest level since a spike during the pandemic lockdown of the economy.

President Trump’s proposal over the weekend to cap credit card interest at 10% for a year won’t arrive in time to help consumers who are already missing minimum payments.

Not to fret, the other 85% of borrowers continue to spend on borrowed time. Total U.S. household debt, including mortgages, auto loans, student loans, and credit cards, reached record highs in late 2025, exceeding $18.5 trillion. This surge was driven partly by rising credit card balances, which neared their own all-time peaks due to inflation and higher interest rates.

There’s an old Wall Street maxim: “Don’t fight the Fed.”

This year, you could add a Trump corollary.

A wise capital allocator doesn’t fight that storm. He doesn’t argue with it. He respects it the way sailors respect the sea: with preparation, with humility, and with a sharp eye for what breaks first.

In 2026, the things that break first are the stories. The narratives. The comfortable assumptions.

Total municipal, state and federal debt service costs soared to nearly $1.5 trillion in the third quarter of 2025. Debt’s easy to accumulate when rates are low. Trouble is, you are obligated to refinance them even after rates go up.

It’s also a key reason why the Trump administration is demanding lower interest rates – even if it means reigniting inflation.

The “Donroe Doctrine,” the White House is calling… because Trump hasn’t yet stamped his name on every facet of U.S. political life.

America in the Americas. China in East Asia. Russia, where Russia still can.

There is a certain gangster logic to it. Not the UN Charter. Not the Magna Carta. More Godfather than Geneva.

Markets, predictably, shrugged.

Oil stocks rallied. Defense stocks jumped. Consultants booked flights to the oil fields near Lake Maracaibo and the Orinoco Belt.