The Federal Reserve on Friday published its every-three-years Survey of Consumer Finances, covering conditions through 2025. The period featured continued economic growth alongside inflation that reached levels last seen in the early 1980s. The new report found that wealth gaps narrowed somewhat, while the capacity to meet debt obligations took a clear step down. As the survey put it, "Families were more likely to be behind on their financial obligations than at any point since the 2010 survey."
By the end of 2025, the share of families behind on loan payments surged to nearly 20%, up from roughly 12% in the previous survey, a jump of about 67%. The portion at least two months late also climbed sharply, to more than 8%, compared with 5% in 2022. Debt burdens rose too: the slice of households with payment-to-income ratios above 40% increased to 8.6% from 6.5% in 2022, the highest since 2013.
Earlier in the week, the New York Fed reported that households said their finances had deteriorated compared with a year ago and expected them to be softer over the next year.
Overall wealth continued to grow. After inflation, average net worth climbed 7% to $1.24 million, while the median rose 2% to $215,900, reflecting bigger gains toward the top. The report noted that net worth growth was "much slower" than in the previous edition that covered 2019 to 2022.
Delinquency data is the most honest measure of household financial strain. Market Briefs covers consumer credit free every morning.
Real median family income increased 7% even as average income fell 6%. The Fed wrote that "families in the lower ends of the income and net worth distributions saw modest increases in median and mean income, while families in the upper ends saw declines," which points to a slight drop in inequality between surveys.
Gains were uneven across age and demographic groups. Income rose notably for families age 75 or older, while it fell 25% for those 35 to 44, a change the Fed linked to lower capital gains income for that bracket.
For households led by a person holding a college degree, median income was 1.9 times that of those with "some college" and almost triple the median net worth. Lower income families "saw some declines" in wealth, while higher income households generally posted gains. Among the bottom quarter by income, median net worth dropped 6% and average net worth slipped 4%. At the other end, those in the top income group saw their median net worth jump 31%.
Two stories are playing out at once: balance sheets overall got bigger, but a growing share of families are struggling to make payments. That combination can show up as rising averages with more late fees and collections in the background. The Fed also reminds us the last time delinquency looked this widespread was around 2010, as the U.S. came out of the Great Recession that stretched from December 2007 through June 2009, when a subprime meltdown rippled through major banks and unemployment touched 10% at one point. If your budget feels tighter even as markets have mostly climbed, you are not imagining it.
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