There’s something deeply American about pretending everything’s fine while your financial house is quietly on fire. It’s the economic equivalent of slapping a “Live, Laugh, Love” sign over a gaping hole in the drywall. And according to the latest data, that drywall might just be load-bearing.
So let’s talk about it: America, land of the free, home of the increasingly broke. Sure, the aggregate numbers make it look like we’re all living our best lives on a yacht powered by S&P 500 gains and vibes. But, as Axios’ Neil Irwin helpfully reminds us, “nobody lives in the aggregate.” Which is economist-speak for: Your rich neighbor is fine, but you might be screwed.
The Great Economic Mirage
Let’s start with the magic trick at the heart of modern American economics: the illusion of prosperity. On paper, everything looks chef’s kiss. Household net worth hit $160.3 trillion in Q4 of 2024, a 9.3% jump from the year before. Hooray! We’re rich!
Except… who’s “we,” exactly?
Because if you zoom in even a little, that 9.3% glow-up mostly belongs to people who bought homes before the Fed realized inflation existed and locked in mortgage rates lower than your blood pressure. Also in that club? People with diversified stock portfolios who know what “diversified” even means. And let’s not forget the 1%—those mystical creatures whose primary financial concern is whether their third Tesla is charging fast enough.
Meanwhile, over in Realityville—home of renters, paycheck stretchers, and folks who treat their credit card limits like suggestions—there’s a different story playing out. And spoiler alert: it doesn’t end with everyone high-fiving each other over a fine cabernet in a hot tub.
Debt: America’s Favorite Hobby
The data’s in, and it reads like a passive-aggressive intervention letter.
“The number of people falling behind on debt payments has risen sharply…”
—Samuel Tombs, Chief U.S. Economist, Pantheon Macro
Yes, it has. And not just a little. The share of credit card debt that’s more than 90 days past due hit 11.4% in Q4—the highest in 13 years. That’s not “oops, forgot to pay the AmEx bill”; that’s “I’ve been ghosting Capital One so long they’re starting to text my mom.”
We’re not even back to 2008 levels of financial despair yet—but we're getting warm. And unlike back then, we can't exactly blame Wall Street's Jenga tower of mortgage-backed securities this time. Nope, this round of suffering is more grassroots. Organic. Locally sourced from your neighborhood paycheck-to-paycheck survivor.
The Debt Pyramid Scheme
Let’s break this down.
There are two Americas.
America #1 is watching their net worth tick up like it’s Christmas morning every day. They’ve got assets. Homes. Investments. They throw around words like “REITs” and “compound interest” at dinner parties and think a $1,500 emergency is “annoying,” not “life-ruining.”
America #2, however, is out here Googling “can I pay rent with a credit card” at 2 a.m. and hoping their Uber Eats driver doesn’t judge them for ordering McDonald’s on Afterpay.
While overall debt service (that’s your loan payments as a percent of your income) is technically manageable—11.3% as of Q4 and still below pre-pandemic levels—that's the aggregate again. Remember: the aggregate is lying to you. It’s the economic version of Instagram filters.
Because while Jeff Bezos’s yacht counts the same in “net worth statistics” as your Hyundai Elantra with three missing hubcaps, their economic realities are… somewhat different.
Student Loans: The Return of the Repressed
Just when you thought it was safe to check your bank balance, Biden-era student loan relief went poof. Like a Vegas magician, except instead of making a rabbit disappear, it made your monthly budget implode.
Tombs argues that the end of student loan relief will stress already-struggling borrowers. You don’t say. Apparently, when you reintroduce several hundred dollars in monthly payments to someone who was barely holding it together, things get... tense. It’s like tossing a stick of dynamite into a fireworks factory and acting surprised by the boom.
And let’s not forget: many borrowers were using that relief money to make ends meet. Now they’re playing financial whack-a-mole, except the moles are bills, and the hammer is maxed out.
Confidence is Cracking
Want to know how people really feel? Check out the consumer sentiment numbers. The average American now pegs their odds of missing a minimum debt payment in the next three months at 14.6%. That’s not a stat; that’s a vibe. A desperate, caffeine-fueled vibe of someone balancing six credit cards, two jobs, and a car payment that thinks it’s a mortgage.
And here’s the kicker: that’s the highest level of debt dread since early pandemic lockdowns. You remember those days. When we were baking banana bread, hoarding toilet paper, and wondering if money still existed.
The economy may have “recovered,” but for a whole lot of people, financial anxiety never went into remission. It just put on a different outfit and showed up with new debt.
The Fed’s Not-So-Magic Wand
What’s the solution? Well, maybe the Fed could cut interest rates.
Maybe.
But inflation’s still partying like it’s 1979, and Jerome Powell’s not exactly itching to bring out the confetti and drop rates unless he has to. So here we are, stuck in this limbo where the economy’s supposedly strong, but also somehow a trainwreck. It’s like being told you’re in excellent health right after passing out on the treadmill.
Even if rates do come down, the effects take time. And time is something people falling behind on their debts simply do not have. Try telling Visa you’ll pay them once the Fed pivots. Let me know how that works out.
The Two-Income Trap, Now With Side Hustles
For a lot of households, this isn’t just about debt. It’s about the slow erosion of financial stability. The old-school model of a secure middle class—steady job, decent wage, house with a picket fence—is now a Pinterest board, not a reality.
Wages haven’t kept up with costs. Inflation gave everyone a pay cut, and suddenly even dual-income households are moonlighting as DoorDash drivers just to afford groceries that now cost the GDP of a small country.
Meanwhile, we’re being told to invest, save for retirement, build an emergency fund, pay off student loans, avoid credit card debt, buy a house before prices rise again, and have three months' expenses saved—in a high-yield savings account, of course. It’s financial advice written for Sims, not humans.
Cracks in the Dam
The Axios article used a lovely metaphor: a dam with a crack in it. Water’s starting to spill out. And everyone’s standing around pretending it’s just a little leak. Nothing a bit of duct tape can’t fix!
Except behind that dam is a growing reservoir of people who are juggling interest payments like flaming swords. The crack isn’t a warning sign; it’s the whole story. If the economy hiccups—if unemployment ticks up, if markets wobble, if another global “event” drops—then that dam’s not just going to leak. It’s going to shatter.
And when it does, the people floating on assets and home equity might get a little wet. But the people already underwater? They’re going to drown.
Renters: The Forgotten Majority
Let’s not forget renters—those lovable suckers funding someone else’s mortgage while trying to make avocado toast illegal again just so they can buy a house in 2043.
Rent inflation may be “slowing,” but that’s like saying your house is still on fire, just not as fast. Rents remain historically high, and unlike homeowners with fixed-rate mortgages from the glory days of 2.5%, renters get zero protection from rising costs. If anything, they get penalized for existing.
And while homeowners saw their net worth spike thanks to asset appreciation, renters saw...their security deposits vanish. Again.
So, What Now?
If you’re part of the America that owns assets and sips wine while your equity grows—congrats. But maybe don’t post too many beach photos, because your other half of the country is busy calculating how many pints of plasma it’ll take to cover rent this month.
This isn’t just about rising delinquencies. It’s about systemic fragility. About an economic “recovery” that was about as evenly distributed as guac at a Chipotle run by capitalists.
And until we stop measuring economic health by how rich the already-rich are getting, we’re going to keep missing the point. Because “aggregate data” can’t buy groceries. And “net worth” doesn’t help you when the repo guy is backing up into your driveway.
Final Thought: Welcome to the Crackhouse
So here we are. The dam is cracking. The stress is mounting. And America is doing what it does best: pretending it’s all fine.
But it’s not fine.
And until we admit that, the crack’s only going to get bigger. Sooner or later, we’ll all need more than duct tape.
We’ll need a new system.
Or at least, a new metaphor.
