Americans in Their 30s Are Racking Up Debt at Historic Rates
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Here's your money briefing for Monday, April 17th. I'm J.R. Whelan for The Wall Street Journal. Millennials in their 30s have found themselves on the losing end of a generational wealth gap since they entered the workforce 15 years ago. That struggle continues as they're piling on debt at faster rates than any other age group.
It's really important for people of prime working age to feel like they're on good financial footing because it empowers them to take risks that can power the broader economy. So that includes things like starting a new business or investing. But for millennials in their 30s, they haven't been feeling that way.
We'll talk to WSJ reporter Gina Hebe and a 31-year-old mother of two after the break.
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Millennials have faced economic challenges since many of them began their careers during the 2008 financial crisis. But now the group born between 1980 and the early 2000s is falling deeper into debt at a faster rate than any other segment. We'll talk to a 31-year-old mother of two struggling to make ends meet in a moment.
What is driving the record rise in debt among Americans in their 30s?
But first, WSJ reporter Gina Hebe joins us. Gina, thanks very much for being with us.
Thanks so much for having me.
So, Gina, a lot of people across age groups have racked up debt as we've emerged from the pandemic. But how bad has it gotten for millennials?
So Americans in their 30s have taken on debt at a really remarkable pace since the pandemic. Their total balances rose to more than $3.8 trillion in the fourth quarter, which is a 27% jump from three years ago before the pandemic. It's also the fastest pace of debt accumulation over a three-year period since the Fed started this survey in 1999. That's excluding the financial crisis, of course, in which a housing bubble drove those numbers to something like 40%.
But still, that's an enormous ramp up.
Right. It's a pretty stunning trend we're seeing.
So how does their debt profile compare to other age groups?
The rate at which Americans in their 30s are taking on debt is higher than any other generation. For example, the average credit card balance for millennials rose to about $6,750 in January, a 26% rise from 2019 levels. Balances didn't really change for Gen X, and for older generations, they actually fell between 11% and 15%. So you can see it's a pretty stark contrast.
How did millennials get themselves into this really tough debt situation?
So what we saw over the pandemic is that households in general did better than people expected in 2020. They were stuck at home because of lockdown. They were receiving stimulus payments, and they were able to pay down some debt. But those benefits are over. The economy's reopened, and people are back to traveling and commuting, and those stimulus payments have ended. And they've ended at a kind of a tough moment for the economy. Inflation pressuring people's budgets. And the last round of stimulus checks went out in 2021. And millennials are getting hit the hardest in some ways.
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