Walmart keeps an eye on the economy - and it doesn't like what it sees
Discount store customers are trending upscale, indicating the wealthy are getting worried
You can talk about the Dow, the price of gold or what a gallon of gas is going for, but what really gives you a fix on the economy is to look at who’s shopping where. A few months ago, thrifty lower-income shoppers were going to Walmart and Dollar General.
They still are but they’re being joined by higher-income consumers who are suddenly thinking harder about each purchase and becoming more price-sensitive.
The more affluent among us usually drive discretionary spending — travel, dining, luxury goods. When they start hunting for bargains, it means they’re expecting tougher times ahead and feeling less secure about their investments, job stability and their future income.
This may sound hard to measure but it’s easily seen in the marketplace. Walmart, Costco and off-price retailers like TJX and Ross are doing well while mid-tier brands like Target are struggling.
Economists watch these trends closely. After all, we live in a consumer-driven economy, where consumer spending amounts to 70% of gross domestic product. When wealthy consumers start cutting back, it can mean a cooling economy in the best scenario or, the worst, a potential recession.
The Walmart trend doesn’t mean wealthy consumers are broke but it does mean they’re nervous and are sending a signal that the economy may be entering a slower phase.
And if the wealthy are worried …
Lower-income consumers are already hurting. The latest report finds that 4.8% of household debt is delinquent, the highest level in nearly a decade. Credit card debt is regarded as the canary in the cage and it’s getting short of breath, with 7.1% of a record $1.28 trillion in debt sliding into serious delinquency.
This is when economists start feeling anxious. It means that people are using credit cards for everyday expenses because they don’t have enough cash on hand.
Auto loans are also in trouble. The overall delinquency rate is around 3% but subprime borrowers have a delinquency rate of 15.8%, regarded as very high. This means that middle- and upper-level borrowers are fine but lower-income borrowers are already in trouble.
Perhaps the biggest economic shock at the moment is student loans, with a 9.6% delinquency rate overall, with 16.2% transitioning into serious delinquency.
If you consider that many consumers are struggling with daily household expenses, credit card debt, a car loan or two and one or more student loans, it’s obvious that many are in one of those “all at once” scenarios, where everything basically goes South at the same time.
Stress is building
All of this may not sound too alarming but it’s the direction of change more than the level that is causing concern, as shown in the numbers:
Overall delinquency
Q3 2025: ~4.5% of debt delinquent
Q4 2025: 4.8%
➡️ Trend: rising again after a brief stabilization
Student loans (the biggest deterioration)
Q3: 9.4% seriously delinquent; 14.3% entering serious delinquency
Q4: 9.6% delinquent; 16.2% entering serious delinquency
➡️ Trend: sharp worsening
This is the most dramatic change in the entire dataset—and it reflects the return of payments after the pandemic pause.
Mortgages (early warning signal)
Q3: rising but relatively stable
Q4: new delinquencies increased and serious delinquency rose to ~1.38% transition rate
➡️ Trend: gradual but concerning increase
Importantly, this deterioration is concentrated in lower-income regions and weaker job markets.
Credit cards (steady—but elevated)
Q3: high but stabilizing
Q4: serious delinquency transitions ticked up slightly
➡️ Trend: plateau at high levels
Balances continue to rise, hitting a record $1.28 trillion.
Auto loans (mixed)
Q3: elevated but stable
Q4: slight improvement in transitions into serious delinquency
➡️ Trend: stable overall—but still risky in subprime
This combination—stress below, caution above—is exactly how economic slowdowns begin. Wise consumers will act accordingly.