Rising Debt Among American Families Raises Concerns
American household debt has surged, nearing levels reminiscent of the period following the Great Recession. This is worrying news, especially since many families have experienced increases in wealth and consumer spending remains robust, based on federal data released recently.
At the close of 2025, the percentage of American families struggling with loan payments escalated to nearly 20%, a significant rise from 12% in the previous reporting period, as detailed in the Federal Reserve’s Survey of Consumer Finances, which is conducted every three years. Moreover, the portion of families behind on their payments by two months or more exceeded 8%, up from 5% in 2022.
According to the report, “Families were more likely to be behind on their financial obligations than at any point since the 2010 survey.”
This data harkens back to the tail end of the Great Recession, which spanned from December 2007 to June 2009, marked by a catastrophic mortgage crisis that saw unemployment peak at 10%.
Interestingly, the Fed’s report, covering the period from 2022 to 2025, showed a slight improvement in wealth inequality, as many Americans saw their incomes rise while recovering from the Covid pandemic.
The average net worth, adjusted for inflation, surged by 7% to $1.24 million, though the median net worth only creeped up by 2% to $215,900. It appears that older and wealthier Americans are experiencing greater gains in this area.
But, wealth accumulation has been notably slower compared to the extraordinary growth of 37% observed between 2019 and 2022, which was the highest increase recorded in over 30 years, according to the report.
Larger wealth gains seem to favor the affluent, with median wealth among the top 10% of earners jumping by 31%, while the bottom 40% saw a decline. For older Americans, particularly those ages 75 and up, wealth skyrocketed by 37%, contrasting sharply with a 23% decline for individuals under 35. This gap likely stems from older individuals benefiting more from favorable stock market conditions.
This disparity might help clarify why younger Americans have reported delays in achieving important financial milestones like homeownership.
Persistent economic challenges have also persisted, leading to a notable decline in consumer sentiment, now at its second-lowest point on record this month, as indicated by the University of Michigan. Frustration with ongoing inflation appears to be a key driver here.
Nevertheless, spending habits remain resilient. Household spending in the U.S. rose by 6.1% over the 12 months leading up to August, influenced partly by higher prices but also by an increased volume of transactions, as reported by the Department of Commerce.
However, increased spending aligns with rising debt levels. A particularly troubling trend is emerging among Gen Z—who face a challenging entry-level job market while also investing in stocks earlier than previous generations—indicating they are accruing significant credit card interest, as highlighted in a Deloitte survey.
During the period from 2022 to 2025, the median debt payment as a percentage of income climbed 2 percentage points to 15.4%. The total debt-to-income ratio reached 94.9%, up from 89.4% in 2022. Alarmingly, 8.6% of families reported that debt payments consumed more than 40% of their income—this marks an increase from 6.5% in 2022 and the highest proportion since the 2013 survey.
