Reference News Network, February 19 report - According to the Spanish newspaper "El Economista" website on February 11, the paper house of the United States is showing signs of fatigue. Since the financial crisis, the overall household debt in the United States has been continuously rising. Although mortgage loans remain the main component of American household debt, the proportion of other types of loans such as student loans and car loans is constantly increasing. At the same time as the growth of debt, the default rate and the financial pressure on households have released alarming signals, with low-income and other vulnerable groups being particularly affected.

Currently, the financial situation of American households does not show any signs of imminent recession, but these vulnerabilities are beginning to raise concerns among the public, including experts and institutions such as the New York Federal Reserve. The main risks include high costs of credit repayment squeezing consumer spending, and potential market downturns that could trigger unpredictable chain reactions.

The scale of debt among American citizens is expanding at an alarming pace. According to data from the New York Federal Reserve for the fourth quarter of 2025, total household debt in the United States reached 18.7 trillion U.S. dollars, setting a new record since the institution began publishing data in 2003.

The impact of high debt levels affects all social strata in the United States, but low-income families are gradually being crushed by debt, with default rates continuing to rise. A report from the Jerome Levy Economics Institute pointed out that the lowest 20% of income earners bear the highest credit pressure. Their debt-to-disposable income ratio is around 120%. In other words, the debt of the poorest families exceeds the funds available for consumption and savings, reflecting the debt crisis of this group.

The heavy burden of American household debt is reflected in the continuously rising default rates. The increase in delinquencies has made the New York Fed increasingly concerned and has drawn significant attention from the American public opinion. According to the New York Fed, the overall default rate on unpaid loans in the United States reached 4.8% in the last quarter of 2025, the highest level since 2017. The increase in delinquency is driven by the most severely affected groups, such as young people and low-income families. So far, the default rate on housing loans remains manageable, but signs of warning have begun to emerge. Verbeke Vanderkloof, an economic research advisor at the New York Fed, stated in a report from the institution: "As household debt levels slowly rise, the mortgage default rate continues to increase."

Another worrying issue is whether the rising default rate will eventually lead to a financial market downturn that could be transmitted to the real economy. Rebecca Christie, a senior researcher at the Bruegel Institute, pointed out: "If there is a widespread private debt collapse, it must be because the real economy has encountered unforeseen problems."

The U.S. economic growth is increasingly linked to financial capitalism, leading to concerns that a stock market decline could ultimately affect the real economy. In an analytical article, The Wall Street Journal pointed out that in 1980, wage income accounted for 58% of U.S. GDP, while now this share has decreased to 51.4%. In contrast, corporate profits in the economy have doubled during this period, reaching 11.7%.

"The division between capital and labor helps explain the disconnect between the prosperous economy and the pessimistic sentiment of some households," said Greg Ip, chief economic commentator of The Wall Street Journal in the article. "The strong financial power of these capital wealth means that market fluctuations have a more significant impact on consumer spending."

There is no clear solution to explain how to alleviate the credit squeeze for American households, especially for low-income families. If the mortgage default rate rises significantly beyond expectations, or if the default rate of high-income groups begins to rise, it may dismantle the paper house, ultimately leading to a slowdown in U.S. economic growth, or even a recession. (Translated by Su Jiawei)

Original: toutiao.com/article/7608501165013140002/

Statement: This article represents the views of the author.