Households are leaning hard on debt just to stay afloat. Total consumer credit stood at over $5 trillion in Feb. 2025 — a nearly $1 trillion jump since the Covid-19 pandemic — while the personal savings rate has dropped to barely 2.5%, among the lowest levels outside of historic recessions.
This isn’t just headline noise; it’s a structural shift. Behind the numbers lie inflation-weary consumers stretched thin by rising living costs and high borrowing rates, piling on credit card and auto debt even as their cash buffers evaporate.
The U.S. consumer — long the engine of global growth — is increasingly running on fumes. Unless wage growth picks up meaningfully, the debt load risks crowding out future consumption, making the economy vulnerable to sharper slowdowns.
h/t MonetaryCommentary