Charlie Garcia

Sat, May 24, 2025, 6:44 AM3 min read

Americans have just hit their credit limit — literally. With credit-card interest rates above 20% and housing sales plunging to depths unseen since 2009, we’re staring at the mother of all consumer squeezes.

Consider the U.S. housing market. While there is a bright spot in the most recent new home sales, thanks largely to builder incentives and discounts, the much larger market of existing homes saw sales slide in April to an anemic annual pace of just 4 million units.

• My ex-wife said she should have been compensated for working part time during our marriage. Do I owe her?

• ‘Is this a good tax strategy or a sham transaction?’ My mother wants to give me her home. I have a plan to avoid taxes.

• Rising bond yields give stock-market investors the yips. Watch these levels.

• Ships are canceling crossings to U.S., and Trump’s new 50% E.U. tariff threat isn’t likely to help

• My husband used my money to renovate his house. Will I now get half of his property in a divorce?

That’s a flashing sign that consumer confidence is buckling. Homes are stacking up unsold, and buyers have vanished, tightening their wallets like Ebenezer Scrooge.

Then there’s the return of tariffs. Seven years ago, when President Donald Trump levied tariffs on everything from Chinese TVs to French cheese, foreign exporters mostly absorbed the hit. Americans’ wallets remained largely untouched. But today, China and Europe are economically wounded — too weak to spare American consumers. This time around, the tariffs will bite.

Yet tariffs aren’t the core threat; debt is. Americans aren’t suddenly paying down credit card balances because they’ve become financially savvy — they’re doing it out of sheer panic. After years of inflation-induced spending sprees, they’re now buried under soaring interest payments.

With fewer dollars available, spending on everything except necessities such as housing, utilities and healthcare is drying up. Many Americans aren’t tightening belts — they’re grabbing lifelines.

Consumer spending powers two-thirds of the U.S. economy. When Americans stop spending, corporate America feels like someone whose credit card gets declined on a first date: embarrassed, squeezed and facing bills they can’t afford.

Companies borrowed heavily during the cheap-money era, piling up almost $1 trillion in debt that’s now coming due. Refinancing at today’s punishingly high rates drains corporate cash away from hiring, innovation and dividends, right as consumers slam on the spending brakes.

Nowadays, spending isn’t about the latest gadgets or overpriced lattes — it’s all about housing, utilities and healthcare. In other words, Americans have traded shopping malls for doctor visits — talk about depressing trade-offs.