Recent reports indicate a significant decline in Americans' non-mortgage debt, which dropped by 10.6% from $40,470 in 2023 to $36,167 in 2024. This reduction is attributed to various factors, including the forgiveness of $39 billion in student loans by President Joe Biden and a cautious financial landscape characterized by stricter lending standards [7d0a81e9]. Notably, five states—Nevada, North Dakota, Mississippi, Oklahoma, and Maryland—experienced double-digit declines in debt levels. Personal, auto, and student loan debts saw reductions of 33%, 14.9%, and 10.5%, respectively [7d0a81e9].
Despite these positive trends, experts warn that lower debt levels may lead to reduced consumer demand, which could impact economic growth. Baby boomers, in particular, are prioritizing financial security as they approach retirement, reflecting a shift in financial behaviors across generations [7d0a81e9].
Meanwhile, younger generations, especially Generation Z and millennials, continue to face significant financial challenges. A study from TransUnion highlighted that Gen Zers in their early 20s are earning less and carrying more debt than millennials did at their age, with a notable increase in delinquency rates [66cee05d]. The financial strain on Gen Z is exacerbated by rising costs of living, particularly in housing and education, which have increased their overall debt burden [d2019a63].
In contrast, Generation X has the highest median non-mortgage debt at $33,859, followed closely by millennials at $30,558. This highlights the ongoing struggles of younger generations to manage their financial responsibilities in an increasingly expensive environment [5b8b7f85].
The total U.S. consumer debt balance rose to $17.1 trillion in 2023, reflecting the broader economic pressures that consumers face. However, the recent decline in non-mortgage debt suggests a potential shift in consumer behavior as individuals adapt to changing economic conditions [8de6156d].
As financial institutions adjust to these trends, credit unions are recognizing the importance of catering to the needs of younger consumers, who are increasingly digital-first and demand innovative financial solutions. However, many credit unions have yet to align their services with the preferences of Gen Z, who are more likely to switch financial institutions if their needs are not met [de028e82].