Understanding the Current State of Consumer Spending and Debt in the U.S.

Despite rising inflation, increased gas prices, and a slowing labor market, consumer spending in the United States has shown remarkable resilience. Retail sales have continued to rise, with households maintaining their spending habits on vacations, dining out, and other purchases. This trend raises questions about the sustainability of consumer spending, which constitutes approximately two-thirds of the U.S. economic output.

How Are Consumers Still Spending So Much?

As of the end of 2025, total consumer debt in the U.S. reached a record $18.8 trillion, up from $14.2 trillion at the end of 2019. This increase includes significant contributions from credit card debt, student loans, and auto loans. However, the growth of consumer debt has slowed recently, with revolving credit, primarily from credit cards, experiencing only modest increases. For instance, revolving debt grew by just 0.6 percent in February 2026, following a spike during the holiday season.

Slowing consumer debt likely signals growing consumer stress

The increase in consumer spending can be partially attributed to rising asset values, particularly in the stock and housing markets. Home equity has nearly doubled since 2019, and many households have accumulated wealth, which has allowed them to continue spending despite higher debt levels. While the wealth gap persists, the bottom 90% of earners have seen relative gains in wealth during the 2020s. However, this situation is precarious; if financial markets decline or unemployment rises, consumer spending could significantly decrease.

How Are Consumers Still Spending So Much?

Despite the overall resilience in spending, there are indicators of growing consumer stress. The LegalShield Consumer Stress Legal Index reported a 10.4 percent increase in financial strain among American households in 2025. Delinquencies on various forms of debt, including credit cards and student loans, have also risen. As of late 2025, 4.8 percent of all debt was in some stage of delinquency, with student loans showing the highest delinquency rate at 9.6 percent.

Slowing consumer debt likely signals growing consumer stress

Experts note that while consumer spending remains strong, the reliance on credit cards poses risks. The New York Times highlighted that the enduring strength of consumer spending has been supported by credit, but as consumers approach their credit limits, the sustainability of this spending is in question.

Slowing consumer debt likely signals growing consumer stress

Critics argue that the current economic model, heavily reliant on credit, is unsustainable. The rising levels of debt and increasing delinquencies suggest that many households are under financial strain, particularly those in lower-income brackets. LegalShield's data indicates that many homeowners are seeking assistance to manage rising housing costs, reflecting broader economic challenges.

Slowing consumer debt likely signals growing consumer stress

Looking ahead, the trajectory of consumer spending will largely depend on the performance of financial markets and employment rates. If economic conditions worsen, a significant shift in consumer behavior may occur, potentially leading to a slowdown in spending that could impact the broader economy.

How Are Consumers Still Spending So Much?

In conclusion, while consumer spending has remained robust, the underlying debt dynamics and signs of stress among households indicate a complex and potentially volatile economic landscape.

How Are Consumers Still Spending So Much?