Debt Payments Consuming Larger Share of Income Gains
New research reveals that an increasing portion of Americans' income gains is being consumed by debt payments. For every dollar in inflation-adjusted take-home pay, a typical household spends about 52 cents on debt repayment. The share of families spending over 40% of their income on debt has reached its highest level since 2013, according to the Federal Reserve. The analysis by The Century Foundation and Protect Borrowers shows that from late 2022 to early 2026, a typical household's real take-home pay increased $109 per month while monthly debt payments rose $57. Inflation-adjusted debt payments grew nearly 15% over three years—about eight times faster than income growth. Experts warn that this trend could limit consumer spending and savings capacity at a time when such activity has been crucial to the U.S. economy's resilience.
Topics: consumer debt economic resilience income growth inflation adjustment