Consumers’ Risk of Missing Debt Payments Rises for Second Straight Month, New York Fed Says
Consumers’ perceived risk of missing a minimum debt payment increased for the second consecutive month in August, reaching 13.2% and moving slightly above its 12-month average, according to the latest Federal Reserve Bank of New York data.
The August reading adds a more recent data point to the New York Fed’s July Survey of Consumer Expectations, which showed the probability rising from 10.8% in June to 12% in July. The August survey, released Sept. 8, shows that measure climbing another 1.2 percentage points to 13.2%.
Missed-Payment Expectations Rise From June Low
The New York Fed’s average perceived probability of missing a minimum debt payment during the next three months fell to 10.8% in June, its lowest level since April 2023. It then increased to 12% in July before reaching 13.2% in August. The latest reading is slightly above the 12-month trailing average of 12.7%.
The July increase was most pronounced among households earning less than $50,000 annually and respondents with no more than some college education. At the same time, consumers reported improved views of their current and future household financial situations.
That improvement did not continue into August. The New York Fed said perceptions and expectations about household finances deteriorated, while consumers also became less optimistic about future credit availability.
The combination makes the August data particularly relevant for ARM companies monitoring consumers’ capacity and willingness to meet existing obligations.
Labor Market Concerns Add Pressure
Consumers’ labor market outlook also weakened in August.
The probability that respondents assigned to a higher U.S. unemployment rate one year ahead increased to 44.4%, its highest level since April 2020. The perceived probability of finding a new job after losing one also fell to 44.2%.
Those readings followed a mixed July. In that survey, unemployment expectations increased to 42.8%, and the perceived probability of losing a job reached 14.2%, although consumers had become somewhat more confident about finding another job.
Household income growth expectations remained at 3% in August, while expected spending growth increased from 4.9% to 5.2%.
Actual Delinquencies Tell a More Stable Story
The rising expectations of missed payments have not yet translated into a comparable broad increase in observed delinquencies.
The New York Fed’s second-quarter Household Debt and Credit Report found that 4.7% of outstanding household debt was in some stage of delinquency, down slightly from the previous quarter. New transitions into early delinquency increased slightly for auto loans and mortgages but remained largely steady for credit cards and other debt.
New York Fed researchers have also cautioned about interpreting elevated credit card delinquency levels. They reported in August that the pace at which credit card balances are newly entering delinquency remains elevated but has been largely stable since 2024. Researchers attributed part of the increase in the stock of seriously delinquent credit card debt to older charged-off balances remaining on credit reports longer.
For receivables professionals, that distinction provides useful context. Consumers increasingly expect difficulty making minimum payments, particularly after the June low, but current credit data do not yet show a similarly sharp deterioration in repayment performance.
The New York Fed’s Survey of Consumer Expectations is a nationally representative, internet-based survey of approximately 1,300 household heads. Respondents remain in the rotating panel for up to 12 months, allowing researchers to track changes in expectations among the same consumers over time.
