Rising Private Debt in the U.S.
The situation of private debt in the U.S. is alarming, with total U.S. household debt reaching a record high of $16.9 trillion in the first quarter of 2025. In just three months, $394 billion was added, marking the largest nominal increase in two decades.
Mortgages are the biggest form of debt for American families, but credit cards have also seen a remarkable increase. Credit card debt experienced the largest jump since 1999. Furthermore, the number of delinquencies is rising, with the rate of borrowers who are 90 days or more overdue higher than before the pandemic.
Economic Challenges
Persistent inflation and rising interest rates further burden consumers. The current interest rate set by the U.S. Federal Reserve stands at 4.50% and is expected to settle at about 3.50% starting in 2026. Problems in the real estate market, such as rising mortgage rates and falling property prices, further worsen the financial situation for consumers. The high national debt of the U.S., which exceeds $36.9 trillion, could also impact economic stability.
Implications for German Investors
The economic situation in the U.S. can affect global financial markets, as the U.S. dollar plays a central role as the world’s reserve currency. A deterioration in economic conditions in the U.S. could lead to uncertainties in global markets. Therefore, German investors should diversify their asset portfolios to minimize risks, for instance, through investments in various currencies or asset forms, such as gold, which is considered a hedge against inflation and currency risks.
In summary, the situation of private debt in the U.S. is concerning and could have far-reaching implications for the global economy. German investors should closely monitor these developments and adjust their investment strategies accordingly.