US household finances: a picture of (relative) health

Consumer balance sheets are strong
Household liabilities as a percent of net worth

Source: Federal Reserve Financial Accounts of the United States, as of March 31, 2026.

Much attention has recently focused on the weak state of federal finances. American families, however, appear to be in better shape. Household assets have risen sharply, driven largely by higher home prices and equity values. At the same time, most Americans have taken a more disciplined approach to borrowing since the Global Financial Crisis.

The chart shows consumer liabilities, or debt obligations, as a share of household wealth. The sharp decline suggests that the consumer sector of the economy is less leveraged than in the past. In aggregate, the US household balance sheet is healthy.

That said, this positive picture of household wealth contrasts sharply with today’s very low consumer confidence readings. The chart data is weighted toward households with greater accumulated wealth, whereas consumer sentiment surveys reflect a broader cross-section of the population. In addition, surveys measure perceptions rather than actual behavior.

What we’re watching this week

Thursday: The European Central Bank meeting is widely expected to conclude with a 25-basis-point rate hike in response to recent higher inflation readings.

Throughout the week: Key US inflation indicators: the New York Fed’s 1-year inflation expectations survey (Tuesday), the August PPI release (Thursday), and the August CPI release (Friday). These will be important data releases ahead of next week’s FOMC meeting.