Total U.S. household debt declined in the second quarter for the first time in six years, according to new data released by the Federal Reserve Bank of New York on Aug. 11.
Red ink has flooded households across the country since 2013, but consumers could be more cautious about their borrowing in the face of stubborn inflation.
Collectively, in the second quarter, household debt fell by $13 billion from the previous quarter to $18.77 trillion, the New York Fed reported.
“The last time that happened was exactly six years ago, early in the COVID-19 pandemic. Aside from that, the last quarter-over-quarter decline was way back in 2014,” Ted Rossman, principal consumer finance analyst at Money Management International, told The Epoch Times in a statement.
Adjusting for inflation, U.S. household debt tumbled by $226 billion, analysis from WalletHub shows.
The average household owed more than $155,000 at the end of the second quarter, about $17,000 below the record high.
As a share of the economy, household debt has been steadily declining since the post-pandemic spike, falling to around 68 percent.
Meanwhile, last quarter’s decrease was driven by a $74 billion drop in mortgage balances—only the third time since 2016—sliding to $13.1 trillion.
The tepid decline in home prices in recent years has limited growth in mortgage balances.
Student loan balances also dipped by $7 billion to $1.65 trillion.
As part of the current administration’s efforts over the past year, millions of borrowers have begun repaying their student loans.
Conversely, auto loan debt jumped by $28 billion to $1.71 trillion, and credit card balances rose by $21 billion to $1.26 trillion—slightly down from last year’s all-time high of $1.28 trillion.
Home equity lines of credit balances edged up by $13 billion to $459 billion.
“These statistics reflect a slowing economy, a trend also evident in other recent figures such as GDP growth (below 2 percent in two of the past three quarters) and the job market (net job creation turned negative in February and July),” Rossman said.
A mixed snapshot of household debt was further clouded by delinquency data.
Delinquency Numbers
Aggregate delinquency rates were little changed at 4.7 percent. While transition into early delinquency ticked up for auto loans and mortgages, rates held steady for credit cards and “other” debts.
Flows into serious delinquency—90 days or more delinquent—clocked in at 2.57 percent, down from 2.91 percent in the second quarter of 2025.
New York Fed researchers have highlighted a divergence in delinquency rates.
Between the third quarter of 2022 and the first quarter of 2026, the share of credit card balances that were 90‑plus days delinquent jumped from 7.6 percent to almost 13 percent, “prompting concerns that Americans are falling behind on their debt payments at rates not seen since the Great Recession.”
“Yet the flow delinquency rate—which captures the rate of new delinquencies—has remained relatively stable for almost two years,” the regional central bank economists said in an accompanying blog post.
With approximately 175 million Americans holding credit cards—60 percent carry balances month to month—a large share of households remains vulnerable to higher interest rates, mounting repayment pressure, and economic headwinds.
A new survey from digital personal finance firm Achieve found that 56 percent of consumers say it would take more than six months to pay off short-term debt—credit cards, personal loans, and buy now, pay later products.
These financial challenges can be traced to the cost-of-living crisis over the last several years, Rossman says.
“The cumulative toll of persistently high inflation has been massive. Many households are facing housing, transportation, food and healthcare costs that have risen 30, 40 even 50 percent since the pandemic,” Rossman added.
“Income growth hasn’t kept pace for millions of Americans. Even if they’re working and even if they get a raise, they feel like they’re falling further behind.”
Cumulative consumer inflation has rocketed 30 percent since June 2020.
The July Consumer Price Index, scheduled for release on Aug. 12, is expected to show the 12-month inflation rate slowing to 3.4 percent, sharply down from the recent high of 4.2 percent.
Excluding energy and food, core inflation has been tamer and could further ease to 2.5 percent.
