The ability of U.S. families to stay current on their debts worsened over the past three years, hitting levels not seen since the aftermath of the global financial crisis, the Federal Reserve reported Friday.
In the central bank’s Survey of Consumer Finances, researchers found that while wealth disparities narrowed somewhat, the ability to meet debt payments deteriorated significantly.
“Families were more likely to be behind on their financial obligations than at any point since the 2010 survey,” stated the survey, a data-rich document the Fed releases every three years to chronicle the nation’s financial health.
The nation in 2010 was just emerging from what became known as the Great Recession, a period that ran from December 2007 to June 2009. A collapse in the subprime mortgage market resulted in contagion across the largest financial institutions in the U.S. and the world, sending unemployment at one point to 10%.
According to the new findings, the portion of families behind on loan payments at the end of 2025 soared from about 12% in the prior survey to nearly 20%, a gain of some 67%. Those behind by two months or more also accelerated considerably, moving to more than 8% from 5% in 2022.
While the report covered the period through 2025, Americans’ concerns over their finances have persisted. A New York Fed survey released earlier this week showed that households reported their financial situations had worsened from a year ago and were likely to be weaker in the year ahead.
Friday’s Fed report also showed the share of debt to income also posted a large gain. Families with payment-to-income ratios of greater than 40% jumped to 8.6%, up from 6.5% in 2022 and the highest level since 2013.
At the same time, the net worth of higher earners soared, with those in the top income group seeing their median net worth rise 31%.
The report covers a period where the economy continued to grow but with inflation rates not seen since the early 1980s.
Amid that climate, the Fed found that real median, or midpoint, family income increased 7% but average income dropped 6%.
“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,” the report stated. “These patterns indicate that income inequality decreased slightly between surveys.”
The report noted that income gains were particularly strong with families aged 75 or older while tumbling 25% for those aged 35 to 44, which the Fed attributed to declines in capital gains income for that group.
“The exceptions to the general pattern of a rise in median income were for Black non-Hispanic families, Asian families, and families toward the top of the usual income and net worth distributions,” the report stated. “For these families, both median and mean income fell.”
Overall, net worth generally increased.
Inflation-adjusted average net worth increased 7% to $1.24 million, though median net worth rose just 2% to $215,900, reflecting gains among those at the higher end. The report noted that net worth was “much slower” than the prior report that covered the 2019-22 period.
There were considerable disparities among education groups. Those with a college degree had 1.9 times the median income level than those with “some college” and nearly three times the median net worth. Lower-income families “saw some declines” in wealth while those with higher incomes saw gains. Families in the bottom one-fourth of income median net worth declined 6% while average net worth fell 4%.
