Despite record highs on the S&P 500 and Nasdaq, the U.S. consumer is showing signs of strain. A WalletHub report found that Texas leads the nation in financial distress, with over 7 percent of residents holding delinquent or over-forbearance accounts. That’s notably worse than California’s 5.1 percent. Cities like Houston and San Antonio rank among the worst for financially distressed populations. Middle-income households have especially felt the pinch as credit card balances, late payments, and bankruptcies rise sharply year over year. This growing burden contradicts frequently cited corporate narratives that describe consumers as “resilient,” revealing a more fragile financial foundation for many households.

Meanwhile, America’s commercial real estate sector is cooling fast. Industrial deal activity in Q2 held steady at $22.9 billion, a stark contrast to the double-digit growth in previous quarters. Warehouse vacancy rates have climbed to 7.1 percent, the highest level seen in a decade. Newly built capacity and uncertainty over trade policy have caused leasing activity and rent growth to taper off. Dealmakers are stepping back as they wait for clearer signals on demand and pricing.

Together these themes point to something investors shouldn’t ignore: the dual pressure on both household balance sheets and real estate fundamentals. Consumers under debt stress often pull back discretionary spending, which can throw off economic predictions. At the same time, an oversupplied industrial property market with rising vacancy could lead to lower yields, slower cap rate compression, and reduced real asset appetite.

Expect more scrutiny ahead. Analysts say upcoming retail earnings will reflect the weak health of middle-income consumers, particularly in sectors like autos, home improvement, and credit services. On the real estate side, any extended lift in borrowing costs or trade policy volatility could further depress CRE activity, especially for logistics properties.

Watch for regulatory moves on consumer debt protections. Meanwhile, CRE stakeholders are watching eviction moratoriums, rent arbitration rules, and ground lease reforms, particularly in cities where co-op buildings or leasehold disputes are active.

As ever, strong markets can mask vulnerabilities beneath the surface. Today’s headlines suggest the current rally may rest on uneven ground.

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