90-day late payment delinquencies are elevated and rising.
Increasing Debt Stress
The New York Fed Household Debt and Credit Report for 2025 Q2 shows increasing debt stress.
Delinquency & Public Records
Aggregate delinquency rates remained elevated in the second quarter of 2025. As of the end of June, 4.4% of outstanding debt was in some stage of delinquency, which is 0.1 percentage point higher than the first quarter.
Transition into early delinquency held steady for nearly all debt types; the exception was for student loans, which saw another uptick in the rate at which balances went from current to delinquent due to the resumption of reporting of delinquent student loans on credit reports after a nearly 5-year pause due to the pandemic.
Transition rates into serious delinquency, defined as 90 or more days past due, were largely stable for auto loans and credit cards; edged up slightly for mortgages and HELOCs; and rose sharply for student loans. About 131.000 consumers had a bankruptcy notation added to their credit reports in 2025Q2, an increase from the previous quarter. The percentage of consumers with a third-party collection account on their credit report remained stable at 4.7 percent.
Student Loans
- Outstanding student loan debt stood at $1.64 trillion in 2025 Q2.
- Missed federal student loan payments that were not previously reported to credit bureaus between 2020Q2 and 2024Q4 are now appearing in credit reports.
- Consequently, student loan delinquency rates continued to rise. In the second quarter of 2025, 10.2% of aggregate student debt was reported as 90+ days delinquent.
Percent of Balance 90-Day Delinquency 2025 Q2
Unlike the Great Recession, mortgages and home equity loans are not a problem, yet.
However, credit cards, auto loans, and student debt are big issues already. Yet, presumably a recession has not started yet.
Delinquency Transition by Age
Millennials and zoomers are the hardest hit by credit stress.
The chart itself is very reminiscent of the credit stress that preceded the Great Recession.
The difference this time is the apparent lack of mortgage stress.
Trump Says the Economy Is Fine
Trump says the economy is fine. From my observations, most economists seem to agree with Trump.
But I don’t. And if charts could speak, the above charts would not agree either.
Related Posts
July 31, 2025: No Improvement in the Fed’s Preferred Measure of Inflation for 8 Months
Core PCE is up 2.8 percent from a year ago, no change in 8 months.
August 1, 2025: Payroll Disaster, Jobs Rise 73,000 but Massive Negative Revisions
Monthly Revisions
- The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000
- The change for June was revised down by 133,000, from +147,000 to +14,000.
- With these revisions, employment in May and June combined is 258,000 lower than previously reported.
August 2, 2025: Did Trump Fire the BLS Head for Cause, Being the Messenger, or Something Else?
A case can be made for all three. But there’s a clear winner.
August 5, 2025: ISM Services Prices Increase 98 Straight Months, Highest Since Oct 2022
The services index is barely above contraction. Prices are another matter.
Stagflation?
The charts and related posts, especially ISM services, screams stagflation.
There’s only one problem with the idea, but it’s a huge one. The long bond (30-year treasury) yield disagrees.
The long end of the yield curve is acting its best in a long time.
Question of the Day: If the bond market no longer believes in the stagflation idea, why should you or I?
Had the federal government not disallowed the discharge of student debt in a bankruptcy, lenders would have been more selective in their offering of student loans. This is a self-inflicted United States wound fostered by our leadership. If the federal government would allow the discharge of student debt through bankruptcy, responsible lending practices would return, and tuition would start to decline…IMHO.
Regarding student loans:
We have an educational system that pushes college as a requirement of success on kids that are too young to question this information.
Then we offer them non-recourse loans that they are not prepared to understand simultaneously with their lack of risk perception and a nearly unquenchable desire to party!
This is a recipe for financial slavery, not success.
Many of those students attending college are far more suited to success in the trades as skilled laborers, mechanics, farmers and parents.
Without the massive debt!
Totally agree Frosty!
I would add that the money my kids got loaned to them, didn’t (used to) have strings attached, so they could take some of the money, and simply party with it if they so chose, and many did. Many also got grandparents to do-sign, so if they are not honest about it, they can skip paying and let them deal with it, and many did and do try for sure.
It was not set up well, and should have been like a traditional bank loan for whatever, but fully explained, and with a Parent present requested perhaps. Not like it used to be, where it could be paid off while you work and easily if you still lived at home, and back then mostly did.
I would suggest that this move of the Party could cost them dearly, and already is verbally. We shall see if it flows forward as things get worse for these voters, er kids…
amerika is unique. we encumber our youth with the only unsecured debt that is illegal to default on. we feed poison and garbage to our people and call it food. we bomb the living hell out of the poorest humans on planet whose leaders dare to trade with countries we don’t like. with a worldwide military occupation on sea and land. crumbling evil empire 101. most cannot handle the reality of situation.
We’re turning into an obese version of the Empire in Star Wars.
Getting into those stormtrooper uniforms will be tricky. There’s gonna be a lot of spandex with little pieces of white armor stuck on it.
i fell asleep in star wars when it was out in movies in last century. so no clue about reference, but i agree about our fat asses and boot lickers. amerika fuck yea
I’ve maintained a healthy weight through my 80 years. It’s amazing the slurs I’ve endured because I take care of myself. It’s hard to have any respect for BFA (big fat American).
They’re starting to catch on. I think having the internet lets them see beyond the approved narrative. Why go into debt for an education dumbed down so that the folks with phone induced brain rot can keep bringing in that tuition money.
I went to college and honestly it was a waste of time. I hated office work with the office sharks; commutes and the stress focused on moving up or out. However, I made it work for me rather than vice versa. I howl in laughter when I hear an operator in the academic industry say-“you will eventually get THE job”. I guess Starbucks or Uber works until THE job miraculously appears. Teaching kids skepticism or critical thinking would be better than wasting money on academic nonsense.
I think you are a little premature with “the sky is falling”.As the first graph shows, total balance is coming from a relatively low level. A little too soon to make any projections. I think your TDS is showing…
You missed 2008
Agreed. The article could easily be rewritten with the title, “debt delinquencies remain extremely low compared to previous two decades but have risen slightly.”
– 90 day late payment delinquencies are elevated and rising.
> Nothing surprising here, and why would we expect less from those with less income, when those with much higher income are doing the same thing, but much worse, and for much more money?
Delinquency & Public Records:
– As of the end of June, 4.4% of outstanding debt was in some stage of delinquency, which is 0.1 percentage point higher than the first quarter.
> I would hardly refer to a 0.1 increase as troublesome, and that’s not the issue anyway, now is it? You had “The Government” playing Bank, with our “Children’s Financial Future” and they were obviously aware of what would occur, they would falter big time, so they made them “Recourse loans”. Now they will become debt slaves for a long time, and with useless degrees that many cannot even find a job with, or if they do, it doesn’t pay nearly enough to pay back the loans and pay your bills. A “Major Con” one could say, to make our young dependent upon the Government.
>> Then we had our Youth, with pile high college debt, able to get Car Loans, and did they ever, have you seen all the new cars on the roads? A lot were financed by 20-25 year olds. How is anyone’s guess… I know many middle age adults that cannot afford a new car, and could use one! Auto loans and credit cards will always be first to pay. They need their car to play and work, and they need the CC for the same reason. Mortgages not so much, as they are a high bill to fall behind on, and then get back on top of, and they are not overly willing to take your home back, as then they have to boot you out, then try to sell it, and do all the paperwork, and all the cost that come with it. They pray you get back on track, and will give you every opportunity, unless they are broke too, which is possible…
Delinquency Transition by Age:
– Millennials and zoomers are the hardest hit by credit stress.
> The youngest of course.
– The chart itself is very reminiscent of the credit stress that preceded the Great Recession.
> Banks loaned too much, to too many, that can’t afford to pay it back. So apparently Econ-101was. It learned once again, and now Banks will want Bail-Outs from… You Guessed Right: The Taxpayers!!! What a load of garbage!!!
– Trump says: the economy is fine. From my observations, most economists seem to agree with Trump.
> They must have different paperwork that they are looking at. I don’t agree either for the same reasons above. Maybe they have money air marked for some of these occurrences lined up already? Maybe some big deal will be made with the Banks, to forgo some of the debt? Not sure what’s brewing, but it’s something good, if the economy is going to stay fine, as they seem to think at the moment…
Honestly, not much to see here. This is mostly due to the Biden student loan moratorium expiring. Other than that sort of artificial change, there is no significant trend change, not yet anyway.
Perhaps the long end is pointing to an asset market downturn and would head back up once again after the reality of stagflation sets in once the bear market is in place.
Mish you doing better.
Expect tariffs on steel and such to drive up auto ins.
As people get kicked off medicare expect ins to go up.
Here are some of the things ive noticed which says a lot about the local economy in my little corner of ca. saw a guy on junky ebike towing is kid in a trailer. He was not the type out for exercise. Going some errand. More ebikes and old bikes with the 2 strokes you get on amazon. Guess what im saying less people can afford cars on the bottom end. The number of wrecks people run from occurs more often. People wreck and ditch the car. They are either hammered or no insurance etc. so they run home and report their junk car stolen so the cant get charged.
You can only tax people with no money so much. At some point the very wealthy will have to pay.
in my corner of gotham poor folks are really hurting. little haiti deep in part of brooklyn, with no yuppies yet. also upstate old small towns infested with druggies and homeless. very sad state of affair in this crumbling empire of debt and war.
It’s pretty disturbing to visit what used to be a pretty little town, with boarded up shops and junkies doing that impossible looking opiod lean.
Wealth really isn’t about money. It’s about what people get directed to do. Seems we’ve decided that taking care of our towns is far less important than building another yacht for some genitally deficiant billionaire.
E-bikes are amazing, if you’ve got the weather and routes for them. No traffic or parking issues, no gas expense, minimal maintenance, no insurance, and you get a bit of exercise and balance training, without becoming a sweaty mess.
Can’t play with your phone while riding one, though, which I suspect is a major drawback for people used to driving around in an internet induced stupor, and if you’re obese, that little seat is going to disappear up your posterior.
I used to love to drive, but that was back when there was room on the road to go fast. About 2000 things just got too crowded, and driving became hell.
Yeah ebikes have their place. My comment was more along the lines of more people cant afford a car.
Homeless wont steak your regular bike anymore.
On the top chart, is that the NY Fed’s term “Severely Derogatory”?
Question of the Day: If the bond market no longer believes in the stagflation idea, why should you or I?
The bond market’s track record of prediction is awful.
Wrong in the 1960s-1970s, when longer-term Treasuries got nicknamed “Certificates of Confiscation”. Bonds 10 years and up lost out badly to inflation.
Wrong in the 1980s, when long term Treasuries were so badly underpriced that they were the best deal ever for the next 30 years, but only for the brave few.
Wrong in 2021-2022, when inflation wasn’t “transitory” and the long term
bondbagholders got eviscerated as rates soared.awesome long term analysis of what happened. the best investment was sifting through pre 65 silver dollars, halves, quarters and dimes for a decade. zero cost basis and minimal effort.
That was before our time. Perhaps some of us had parents or grandparents that did it back in the 60’s or 70’s?
Rarely I have found one in change over the years.
They make a distinct sound when hitting the counter.
I remember 30 yr treasuries paying 15%. I guy I worked with bought a bunch. Smart move.
“Trump says the economy is fine. From my observations, most economists seem to agree with Trump.” You and I are definitely reading different articles. Most economists I read are worried about our future.
I’m sure he could point you to a safe space with all double plus good news.
Most of the charts just say we’re back in 2019… not 2008.
The only data showing “worse than 2019” is credit card delinquency balance. The other traces show that’s driven by 18-39 year olds.
I suppose a certain fraction of every generation has to experience the “credit card trap” once in their lives.
As for the 2008 scenario… housing prices are starting to roll over in some markets… stock market at record valuations but not obviously topped out yet… inflation still on the ugly side … maybe it’s more like 2006?
If we’re in 2007 (according to the charts) then we have two more years to go before the peak although it does appear the curve is steeper this time around so maybe 18 months? Asking for a friend who wants to buy more puts on this market.
My millennial daughter for years insisted that (being a Bernie bro) her loans would be forgiven… Oops.
Yeah im not a fan of forgiveness. But should be able to default like any other loan. The companies who hold the loans have the politicians in their pocket. The borrowers do have a point. In 08 people with mortgages got bailed out the banks got bailed out. During covid businesses got bailed out. Airlines and other companies got bailed out. Guess its just how much political pull a group has.
correct. it’s criminal that we encumber 18 year olds with debt that cannot be defaulted like every other type of debt.
And in many cases, their Parent’s and Grandparent’s possibly as well.
The companies giving the loans ARE the government. That’s what his daughter was hoping for, forgiving her government student loans (private loans can’t be forgiven by the government).
Also why should these loans be forgiven but not others like credit card debt or mortgage debt or car loans?
Because the Taxpayer foots the bill for student debt, that was Government issued debt (Taxpayers responsible), so nobody really squawks.
All others mentioned are Bank Loaned and that is owned by someone, some corporation, or investors etc. but not the taxpayers. They are going to want there money one way or another…
Question of the Day: If the bond market no longer believes in the stagflation idea, why should you or I?
Great one! But when the future states of the world, the scenarios, splinter across a wide spread of scenes, in the face of such extravagant political and techno-complexity, I’m tempted to think even the supposedly sage people are guessing. And if there is enough cash still sloshing around in the hands of the haves (not these marginal debtors, who are perennially broke anyway), the haves can afford to split their bets into a lot of baskets, the long bond being one of them, others being AI, real estate, data centers, energy, defense ….
Does that make sense?
Will be interesting to see how the resumption of student loan payments will radicalize young people. The cost of living is already insane and many of that age group see no potential to live the life their parents did.
True as it relates to housing prices, but young people have no idea how much people scrimped 40 years ago. I remember living on a 10 lb bad of potatoes for two weeks.
Yes….back when there were no credit cards.
You could literally starve between paychecks.
The student loan spike is the outlier. Would be telling to see the breakdown by selected major for more meaningful data.
You’d guess that STEM, legal and medical folks are fine, but that humanities majors are having a tougher go of it.
STEM is actually doing the worst, because everyone went and got a compsci degree so now they’re worthless. That is going to have fallout if people start taking their degrees elsewhere. I’m sure Asia would pay nicely for American grads.
creatives and business folks run the big firms.
Mish, I look forward to your dissent but in my long experience, credit spreads, relative strength and the VIX combine into the only metrics one needs to look at for a sense of the health of the general economy. They incorporate the condition of the debt markets, the equity markets and sentiment that can be put on one simple chart. And they all point to s “steady as she goes” economy and market.
I appreciate, and agree w/ your main metrics. But, they also don’t forecast things near at all in advance on things like The Minsky Moment and debt bubbles. Sure, if you’re not away from your desk for 10 minutes maybe you can catch some (near concurrent) moves. But things are arguably more Group Think – perhaps more than ever. To me everyone has a false sense of seculity. and at ridiculous levels that everyone has gone FOMO on for years now.
The people investing in those products are all in the same Rosy vox populi. To counter that I’d assert metrics sans Wall Street are becoming better. A fave of mine is the CC Spread. I’d rather listen to consumers than Wall Street. They’ll register issues before WS notices IMO.
The Palantir chief put out a book touting tech maximalism, and if I have this right (I got bored quickly, having got the point, and paused my reading) throw the consumers off the bus (and of course hire Palantir here, there and everywhere). But I see various sorts of elite succession scenarios playing across this polity.
Between that and declining interest rates, I can see why Mr Buffett excited BofA. Thanks.
No doubt we are headed for a downturn, how deep is anyone’s guess. Might be slow this time instead of abrupt. They’ll be busy trying to distract.
Just wait until the 3rd qtr.
After WWII we used the GI bill to invest in the next generation and statistics showed for every $1 we invested in.a young persons education we recouped $7 in higher taxes on the higher incomes those individuals earned. We should be considering College education as an investment in the next generation instead of loading them up with mortgage level debt.
“Let them eat debt” was the cynical diagnosis Raghuran Rajan identified of the modern big economies around the time of the ’08 crash, in his book Fault Lines. He was Chief Economist of the International Monetary Fund from 2003 to 2006 and the Governor of the Reserve Bank of India from 2013 to 2016. My understanding is he had too much integrity to keep that job.
One could argue there was a moral hazard problem with too much easy credit, perhaps, arguably, enabled with the exploitation of young minds by vendors with dubious intentions. I tend to be of a conservative school on that: I worked and paid off my (modest, carefully contracted) student debt.
But now, the Trump admin wants to scale back the whole welfare state, credit included, and “let them eat” a whole new menu, and new banquet of other dubious things. Tough love? Maybe it depends on where one is sitting.
Not quite.
The cost/benefit equation for college is not as clear now as it was in the 1950s. Even through the 1970s you could work your way through college with part-time jobs.
That’s no longer possible, college prices have risen much faster than inflation, and faster than college-graduate incomes.
Also, not everyone needs to go to college. A balanced economy doesn’t need 100% college graduates. Many people aren’t really ready when they get out of high school.
“Also, not everyone needs to go to college. A balanced economy doesn’t need 100% college graduates”
This is the key statement. SO many young people are just using 3-4 years of college as a way to delay working / adulthood. So they end up even further behind due to a combination of debt and lost years of earnings/job skills.
Probably no more than 30% of jobs require an actual degree which is likely not much different than the 50s.
Great report, Mish. And to add to this as a growing BIG PICTURE problem is the effects of AI
For the first seven months of 2025, rising adoption of generative AI technology by private employers accounted for more than 10,000 job cuts.
I think it’s quite obvious that we’ve arrive at the point where not only is AI causing increasing job cuts, but it’s also slowing down people’s ability to get re-hired.
If AI is already outpacing Moore’s Law, then we’re in for a very rocky 2-3 years as this starts to accelerate to the point that forces some significant level of oversight.
Fewer white-collar jobs will reduce income tax & social security revenue will accelerating defaults on all sorts of debt.
At this rate people will start doing the one thing ai still can’t: operating a guillotine.
That’s morbid.
Old news. I read this two weeks ago. Blonde neighborhood walking guy and Orlando Miner have been on these problems.
Nope. Those charts are definitely talking.