US delinquencies jump for upper-income borrowers

UPPER-INCOME AMERICANS ARE increasingly falling behind on credit card and auto loan payments, signaling an underlying vulnerability in the US economy as the labor market slows.

- JONNELLE MARTE & MARIA ELOISA CAPURRO

Delinquencies on such debts from those making at least $150,000 annually have jumped almost 20% over the last two years, faster than for middle- and lower-income borrowers, according to the credit-scoring firm VantageScore. A recent Federal Reserve Bank of St. Louis study found the share of people making late card payments in the highest-income zip codes has risen twice as much over the last year as in the lowest-income ones.

The mounting liabilities coincide with a slowdown in hiring that has hit white-collar workers especially hard, raising the stakes for an economy that has come to rely more and more on consumer spending from top earners to power continued expansion.

"Financial stress is evident from the lowest-income household to the highest-income household," said Mark Zandi, the chief economist for Moody's Analytics. With the Federal Reserve keeping interest rates high and pandemic-era student loan forbearance programs now over, "it's just become very difficult to juggle all of that," he said.