Wall Street Ignores Cracks in U.S. Economy’s Foundation

Wall Street’s optimism amid troubling economic signs raises concerns about the U.S. economy’s stability. In 2025, major stock indexes such as the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average reached record highs, largely driven by advancements in artificial intelligence and favorable interest rate conditions. However, key economic indicators suggest cracks in the foundation of the economy, which may undermine this apparent prosperity.

Key Economic Indicators Signal Troubling Trends

Despite the stock market’s upbeat performance, several economic indicators are raising red flags. The delinquency rate for commercial mortgage-backed securities (CMBS) surged to an unprecedented 11.76% in October 2025. This marks a dramatic increase compared to 2023, reflecting a tough landscape for commercial real estate amid rising unemployment and the lasting impact of remote work culture.

Commercial Real Estate Challenges

• CMBS delinquency rate hit 11.76% in October 2025.
• Increased nearly tenfold since 2023.
• Higher than post-financial crisis levels.

Additionally, auto loan delinquencies have reached alarming levels. The Auto Loan 60+ Delinquency Index recorded a peak of 6.65% in October 2025. This statistic indicates that borrowers are defaulting on their auto loans at rates unseen since the Great Recession.

Auto Loan Delinquency Trends

• Auto loan delinquency rate reached 6.65% in October 2025.
• Previous highs during the Great Recession were around 5%.
• Outstanding auto loan debt in the U.S. totals $1.66 trillion.

Increasing Credit Card Delinquencies

Credit card debt is another area of concern. The share of U.S. credit card balances overdue by 90 days rose to 12.41% in the third quarter of 2025, the highest since early 2011. With over $1.2 trillion in outstanding credit card debt, consumers’ financial conditions appear weaker than the flourishing stock market might suggest.

Credit Card Delinquency Rates

• Credit card delinquencies over 90 days reached 12.41%.
• Highest level since first quarter of 2011.
• Current debt exceeds $1.2 trillion.

The Long-Term Economic Cycle

Despite the current indicators pointing to potential economic trouble, long-term investing strategies have historically proven resilient. The average U.S. recession lasts about 10 months, with no downturn exceeding 18 months. In contrast, economic expansions typically last around five years, fostering a favorable environment for investments.

Investment Insight

• Average recession duration: ~10 months.
• Longest recession: 18 months.
• Typical expansion lasts about five years.

Although economic cycles fluctuate, history suggests that maintaining a long-term outlook is essential for investors. The current divergence between stock market gains and economic indicators may ultimately require close monitoring. As U.S. economic challenges continue to surface, attention from Wall Street could shift, potentially recalibrating market expectations.