The Federal Reserve released its triennial Survey of Consumer Finances on Friday, the first full read on household finances since 2022. Real median family income rose 7 percent between the two surveys to $82,200, while real mean income fell 6 percent to $145,200. The split tells the distributional story: families at the lower ends of the income and net worth distributions saw modest increases in median and mean income, while families at the upper ends saw declines.
Wealth broadened. Real median net worth rose 2 percent to $215,900 and real mean net worth rose 7 percent to $1.24 million, with most families across the income and wealth distributions posting increases. The homeownership rate held at 66 percent, and the median net housing value for owners rose to $230,000 from $218,900 in 2022. Retirement plan participation ticked up to about 65 percent, and account balances rose for holders. Stock market participation slipped slightly to 56 percent from 58 percent, but conditional on holding stock, median holdings grew 36 percent to $77,400 from $56,900.
The stress indicator is debt service. The share of families with any debt held steady at 77 percent, and median and mean debt outstanding were unchanged. But the fraction of families whose debt payments exceed 40 percent of income, a marker of acute financial vulnerability, rose from 6.5 percent to 8.6 percent, a level last seen in the 2013 survey, when households were still working through the post-crisis deleveraging.
For the rates market the survey cuts both ways. Broad-based income and wealth gains support consumer resilience, one reason the Fed can contemplate a hike at the October 27-28 FOMC. But the return of 2013-level debt distress at the bottom of the distribution, against 7.4 percent mortgage rates and record borrowing costs for low-rated companies, is the household channel through which tighter financial conditions eventually bite into credit performance.