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Are Americans’ household debt levels a major concern for the economy?

The Federal Reserve Bank of New York reported U.S. household debt reached $18.6 trillion, a record nominal high, with borrowers adding $4.4 trillion since 2019.
Rising costs have reduced purchasing power and pushed consumers into more borrowing, while the National Retail Federation reported nearly 203 million shoppers sustained strong holiday spending this year.
Experts note that delinquencies are rising on auto loan borrowers and credit card balances now exceed $1.23 trillion, with auto delinquencies reported up to 5%.
Lower‑income households face financial strain reflecting a K-shaped economy as Moody's Analytics reports the top 20% of income earners accounted for 63% of consumer spending.
Measured against GDP, household debt is about 65% of nominal GDP in 2025, and economists are divided as some cite income gains while others warn rising delinquencies and nonbank lenders increase risks.

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