Americans in Their 30s Are Piling On Debt

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Danielle Smith and her family thought they had finally escaped the paycheck-to-paycheck cycle they had fallen into. They saved money during the pandemic while they were stuck at home. They used stimulus checks to chip away at $20,000 in credit-card debt and enjoyed a reprieve from monthly payments on their $160,000 in student loans.

Lately, they have been hit with one unexpected expense after another, from an out-of-pocket MRI to a broken water heater. They also took trips with their four children that they had put off because of Covid, including to Walt Disney World, local museums and the zoo. By 2022, their credit-card debt had doubled to nearly $40,000.

“It’s just a never-ending cycle of playing catch-up,” said Ms. Smith, 34, who together with her husband has a household income of roughly $80,000 a year in Lincoln, Neb.

American millennials in their 30s have racked up debt at a historic clip since the pandemic. Their total balances hit more than $3.8 trillion in the fourth quarter, according to the Federal Reserve Bank of New York, a 27% jump from late 2019. That is the steepest increase of any age group. It is also their fastest pace of debt accumulation over a three-year period since the 2008 financial crisis.

The debt buildup could worsen a generational wealth gap that was already on the rise for millennials. Many started their careers during the 2007-09 recession with no bargaining power, crimping their earnings ever since. Even when the economy is doing well, some have said that they feel as though their financial gains are fragile. That can leave them hesitant or less able to take risks that would power the broader economy, such as starting a business or investing.