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Consumer spending has helped keep the U.S. economy resilient, but household balance sheets tell a harsher story. Debt payments are claiming a growing share of Americans’ income gains, leaving less room for spending or saving.

A new analysis by the nonpartisan think tank The Century Foundation and consumer advocacy group Protect Borrowers measured how debt costs have changed relative to income. The findings point to mounting pressure on working households despite gains in inflation adjusted pay.

The estimated real monthly take home pay of a typical U.S. household rose $109 from late 2022 to early 2026. Real take home pay refers to wages after accounting for inflation.

Over the same period, a worker’s monthly debt payments increased by $57. For a household with one earner, researchers estimated that 52 cents of every dollar of income gained in recent years now goes toward higher debt payments.

The picture was even more severe for households with two earners. Researchers projected that the entire real income gain for those households, and then some, is being consumed by debt.

Inflation adjusted debt payments increased nearly 15% over roughly three years, according to the analysis. That was about eight times the pace of household income growth, which came in below 2%.

The Century Foundation and Protect Borrowers examined credit records covering millions of working age Americans between ages 25 and 64. Researchers combined those records with Census Bureau income data to measure the growing weight of borrowing costs.

The analysis included payments on credit cards, auto loans and leases, student loans, and home equity lines of credit. It excluded mortgages and some other forms of borrowing, including many buy now, pay later loans and medical payment plans.

Angela Hanks, chief of policy programs at The Century Foundation, said the exclusions mean the analysis may understate the pressure confronting households. Adding mortgage payments and installment loans not included in credit files would have pushed measured household debt payments higher.

“Even though it shows that workers’ wages are getting eaten up by debt payments at a tremendous level,” Hanks said, the findings represent “perhaps the rosiest analysis that we could have done using the data.”

Hanks also said more consumers are using credit cards to pay for basic expenses when their paychecks do not cover their costs. That reliance adds another layer of concern as debt consumes an increasing portion of income growth.

Separate Federal Reserve data also showed rising strain. The Fed’s latest Survey of Consumer Finances found that 8.6% of families spent more than 40% of their income on debt payments in 2025, up from 6.5% in 2022.

That 2025 reading was the highest level recorded since the 2013 survey. The increase indicates that a larger share of families is committing a substantial portion of income to servicing debt.

Mortgages and student loans are often viewed as good debt because they may help borrowers build wealth or increase their earning power. Even borrowing for potentially beneficial or necessary expenses, however, can become a serious financial burden when repayment stretches across longer periods.

Matt Schulz, chief consumer finance analyst at LendingTree and author of “Ask Questions, Save Money, Make More,” warned about debt lasting six months, a year, or longer. He also pointed to seven year auto loans and mortgages that are longer or larger than borrowers would ideally choose.

Schulz recommended examining the full cost of borrowing, the repayment terms, and whether enough savings are available for unexpected expenses. Those considerations can help borrowers determine whether a planned purchase is realistically affordable before accepting debt.

He also offered three practical steps for limiting unnecessary borrowing. Consumers should establish a realistic budget before shopping, make a list of intended purchases to resist impulse buying, and compare prices to reduce both costs and the amount they may need to borrow.

The findings show how income growth can look considerably weaker once rising debt payments enter the equation. For many households, the gains appearing in a paycheck are increasingly committed before that money can be spent or saved.

DISCLAIMER: GoldInvestors.news is not a registered investment, legal or tax advisor or broker/dealer. All investment/financial opinions expressed by GoldInvestors.news are from the personal research and experience of the owner of the site and are intended as educational material. Although best efforts are made to ensure that all information is accurate and up to date, occasionally unintended errors and misprints may occur.