A new analysis by The Century Foundation and Protect Borrowers examined how debt obligations are affecting American households’ ability to benefit from income growth. The research tracked millions of working-age consumers and found that real take-home monthly pay increased by an estimated $109 between late 2022 and early 2026, when adjusted for inflation. However, during the same period, monthly debt payments rose $57 per worker.
The findings indicate that for single-earner households, approximately 52 cents of every dollar gained in real income over the period went toward higher debt payments. For two-earner households, researchers project that income gains were entirely consumed by debt payments or insufficient to cover the increases. The analysis examined credit records across multiple debt categories, including credit cards, auto loans and leases, student loans, and home equity lines of credit, though it excluded mortgages and certain other borrowing arrangements.
Inflation-adjusted debt payments increased by nearly 15 percent over roughly three years, a rate approximately eight times faster than household income growth, which expanded less than 2 percent. According to Angela Hanks, chief of policy programs at The Century Foundation, the analysis may actually understate financial pressures on households since it does not include mortgage payments or certain installment loans not recorded in traditional credit files, such as buy now, pay later arrangements and payday loans.
Separate data from the Federal Reserve’s Survey of Consumer Finances corroborated the trend, showing that 8.6 percent of families spent more than 40 percent of their income on debt payments in 2025, compared with 6.5 percent in 2022. Consumer finance experts note that while some debt, such as mortgages and student loans, may build wealth or earning potential, extended repayment terms and larger borrowing amounts can create financial strain. Recommendations for managing debt include evaluating total borrowing costs, understanding repayment terms, and maintaining adequate savings reserves before taking on new obligations.
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