Are we on the verge of a debt crisis? What the data shows for certain is that families have been struggling for some time to keep up, and it’s going to get harder for them to do so, especially under President Donald Trump. “Finances are brittle,” said Mike Pierce, a co-author of the Century Foundation report and the executive director and co-founder of Protect Borrowers, a borrower advocacy organization. “[Families] feel like they’re operating without a net. And you actually do see that in the data, that people are leveraged in a way that they haven’t been in recent memory.”
All of these problems share a core cause: Prices and interest rates are both high. “Stuff’s too expensive,” Pierce said. “People are turning to debt to be able to deal with routine expenses that they were paying for in cash as recently as half a decade ago, and then that’s having all of these spillover effects across other kinds of consumer credit.”
The increases in home and mortgage prices have meant that fewer people are buying homes, but some purchases aren’t as easy to forgo. That’s especially true for cars, which many Americans need to get to work, school, day care, and so on. The average cost of a new car has hit $50,000, making monthly payments on a car loan about $775. More families are buying used cars to cope, but eventually families need to replace their older vehicles—and used car prices last month hit their highest level since the summer of 2023.