Consumer exhaustion has been mounting for months, and now the strain is becoming unmistakable. This is particularly troubling given that consumer spending accounts for roughly 69% of the U.S. GDP. Recent data and industry warnings paint a picture of growing financial stress across American households.
JPMorgan Chase, often seen as a bellwether for the banking sector, has reported that the portion of its credit card lending business deemed unrecoverable has climbed to a 13-year high, as noted by the Financial Times.
Federal Reserve data corroborates this trend, showing that the credit card loan charge-off rate for the top hundred banks by asset size reached 4.58% in the last quarter of 2024, a level not seen since the third quarter of 2011.
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The historical peak was at the end of 2009, when the rate soared to 10.64%. During the pandemic, however, the charge-off rate had plummeted to its lowest point since 1985—just 1.56%—as consumers used relief payments and limited spending opportunities to pay down debt.
But the landscape has shifted. A recent report from the Federal Reserve Bank of Philadelphia highlights that credit card performance continues to show signs of consumer distress. The percentage of accounts paying only the minimum has reached a 12-year high, with a 25-basis-point increase from the previous quarter’s record. Economists noted, “Account-based delinquency metrics remained near or set new series highs in the seasonally delinquency-heavy fourth quarter.”
These trends are echoed in broader industry data: credit card balances rose 4% in the fourth quarter compared to the previous year, but this growth is a marked slowdown from the double-digit increases seen in 2022 and 2023.
Meanwhile, the share of credit card accounts 90 days past due and the number of consumers carrying credit card debt have both reached their highest levels in over a decade.
JPMorgan’s CEO Jamie Dimon has underscored the importance of the unemployment rate—which currently stands at 4.2%—as a critical metric for predicting future loan losses. In the bank’s Q1 2025 earnings call, Dimon estimated the odds of a recession at about fifty-fifty, warning, “Obviously, if there's a recession, credit loss will go up and other factors will change, too.”
He also pointed out that the analyst community has already reduced its earnings estimates for the S&P by 5%, and speculated that these estimates could fall further in the coming months. Chief financial officer Jeremy Barnum added that April’s spending appeared to be “a little bit of front loading,” as consumers rushed to make purchases before the full tariffs announced by the Trump administration took effect.
The mood among consumers has soured noticeably. According to the University of Michigan, consumer confidence began to decline in December and has since plummeted to near-historic lows. The Consumer Sentiment Index dropped to 50.8 in April 2025, the second-lowest reading since records began in 1952, signaling not just dissatisfaction with current conditions but deep pessimism about the future. Inflation expectations for the coming year have surged to 6.7%, the highest since 1981, as Americans brace for continued price increases that threaten to further erode their purchasing power.
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