PNN – A new report by the U.S. Federal Reserve indicates that the ability of American households to meet their debt obligations on time has deteriorated over the past three years, reaching a level not seen since the global financial crisis.
According to the report of Pakistan News Network citing CNBC, Federal Reserve researchers found in a survey on consumer financial conditions that, although the wealth gap between households has narrowed somewhat, their capacity to service debt has significantly eroded and weakened.
A section of the report notes that “American households are now facing delays in meeting their financial obligations more frequently than at any time since 2010.” The Federal Reserve publishes this detailed report every three years to provide an overview of the financial health of U.S. households.
According to CNBC, in 2010, the United States was gradually emerging from the crisis known as the “Great Recession”—a downturn that lasted from December 2007 to June 2009. The collapse of the subprime mortgage market spread the crisis to major financial institutions in the U.S. and around the world, causing the unemployment rate to peak at 10 percent at one point.
New findings indicate that the proportion of households falling behind on loan repayments by the end of 2025 rose from approximately 12 percent in the previous survey to about 20 percent—an increase of roughly 67 percent. The number of households delinquent on their loan payments by two months or more also saw a significant rise, climbing from five percent in 2022 to over eight percent.
While this report covers household financial conditions through the end of 2025, Americans remain concerned about their financial situations. A Federal Reserve Bank of New York survey released early last week revealed that households view their financial standing as worse than it was a year ago and expect it to deteriorate further over the coming year.
This report comes as real-time estimates from Brown University indicate that U.S. President Donald Trump’s (self-initiated) conflict with Iran has already saddled American consumers with $100 billion in additional energy costs—a figure that is rising by approximately “one million dollars every two minutes.”
Yesterday’s Federal Reserve report also indicated a significant rise in the household debt-to-income ratio. The share of households spending more than 40 percent of their income on debt payments climbed from 6.5 percent in 2022 to 8.6 percent—the highest level since 2013.
The report covers a period during which the U.S. economy continued to grow, yet inflation reached levels not seen since the early 1980s.