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?
