Marketplace - Credit card delinquencies climb

Episode Date: August 11, 2026

Credit card delinquencies are sitting at 13% so far this year. It’s the highest national rate since the tail-end of the Great Recession. The aftermath of the COVID-19 pandemic, including high inflation and job uncertainty, is partially to blame. Also in this episode: Home equity lines of credit become more popular as traditional borrowing rates climb, small business owners are cautious but optimistic — and trying to hire — and Kyla Scanlon explains economic nihilism.Every story has an economic angle. Want some in your inbox? Subscribe to our daily or weekly newsletter.Marketplace is more than a radio show. Check out our original reporting and financial literacy content at marketplace.org — and consider making an investment in our future.Read the stories in today’s episode:Younger consumers are turning to "little treats" in the face of economic nihilismWhy lines of credit have become a preferred piggy bank for homeownersCredit card delinquencies approach Great Recession levelsChina is shaping the technology of the future. Where does that leave the U.S.?Small business owners are feeling uncertain but optimistic

This economy and the Chinese economy, both shall be discussed. From American public media, this is Marketplace. In Los Angeles, I'm Kai Rizzdahl. It is Tuesday, today, 11 August, good as it always is, to have you along, everybody. This is a big data week, as I think I said yesterday, inflation most particularly at the consumer and wholesale levels. But that's for tomorrow. Today, we're going to sit back and take stock, and we're going to do it once again with Kyla Scanlan.

She's an economics content creator, also an author as well. Callah, great to have you back on. Thanks for having me. Let me throw you the easy one first. What's your sense right now of this economy? Oh, I mean, I think this economy is kind of confusing everybody. You know, it's a bit confusing to figure out where the growth is coming from, if the growth is sustainable, if it's all AI-driven, how much risk that might be injecting.

into the economy, sort of how spending is holding up, the labor market, inflation. I feel like there's definitely more questions and answers right now. All right. Here comes another question. Which of those things are you most worried about? I think I'm pretty worried about some of the decisions that the Federal Reserve will have to make. The Fed always has a pretty tough job, but right now balancing between the labor market and the dynamics there where entry-level hiring has had some issues and then balancing inflation, or we're not really sure if prices are going to continue to tick up, I just worry that the Fed is going to have some tough choices on their hands as we go into the end of the year. What's your sense of Chairman Warsh? I think that he has a hard

job like every Fed chair does. I think that the bond market made it pretty clear that they were a bit worried about credibility. They were a bit worried about the lack of guidance from the Fed, the market and the Fed are so interlinked. So I think that he's trying to extract the Fed from the market a little bit, but that won't come without pain. New topic, young, younger people in this economy. You've written a lot about it. You've written a lot about how they don't really have much faith about how they are gamifying it, right, because nothing else seems to work. Talk about that for a little bit, would you? Yeah, I think that a lot of pieces have been pinned on what young people are doing. They're going to the gym more. They're traveling a lot. They're

buying up a lot of little treats. And I think people are trying to figure out exactly why that sort of economic behavior is happening because it seems strange. But in my opinion, I think all of these things are rational. So I think when people look at the spending patterns of the younger generation where there is this lean towards little treats, so buying up lobuboos, do buy chocolate lattes, whatever it may be, that sort of spending is rational because they're putting off the bigger milestone, spending, like buying a house, having kids, because it feels further and further out of reach. You also keep going. What does that mean? You know, because these younger people will be in a position in five or ten years where those decisions are going to affect

the function of the overall economy, you know? Yeah, I mean, I think everybody has sort of internalized this sense of fear with AI. And so I don't know if younger people, if anybody, honestly, is really thinking about Lo, in a couple of years, like, I'm going to have to be very responsible. Like, I feel like there is some element of dumerism within the spending. I don't think it's all doom spending. I don't totally love that word. But I do think that for them, there is that sense of financial nationalism. It's like, well, why would I invest? Ginzi is saving at a pretty high rate. But why would I contribute to the traditional life path if it doesn't feel like it's in reach for me. I'm going to go and do these sod hustles. I'm not going to work for a corporation.

I'm going to develop a small business. It's not necessarily that traditional life cycle life ladder that we typically might see. That phrase you use, financial nihilism. That's, that's discouraging. That's from Demetri Kofinis. Yeah, he coined that term in 2021. And it was around the time when GameStop was happening. So everybody was piling into GameStop, AMC. And his sense was like, whoa, you know, these are not real things. Why are people buying them up? They must not really believe in the underlying assets that they're purchasing. There's this nihilistic tendency. They just want to buy because there's this herd behavior towards buying. And you can extrapolate that nihilism to the broad economy where people is, you know, you see it in the survey data. They feel like they don't

have a stake in the economy. And so they just don't participate in the way one might expect. But expectations are always a bit foggy to begin with. Do you think this is just the new normal, not the nihilism and not any of the, you know, sort of, you know, sorry, theoretical stuff. I mean, I know you're a much deeper thinker. Well, I mean, you're a much deeper thinker about the economy than I am. But is, but is not true. No, it is, it is totally true. We've had this conversation.

We did it in March when we were doing that live of it. Do you think this is just the new normal? I don't know. I mean, so, okay, so I really like this quote from my former professor, Dr. Tachi, where he said the opposite of rational is not being. irrational as being normal. And so he's essentially saying there that the normal thing is not the rational thing to do right now. What the best thing to do is to go and try out different things because this traditional life ladder is being actively threatened by AI or the decisions that the government is making or even honestly the decisions the Fed might make, raising rates could

easily pop the AI bubble. It's not necessarily a new normal. It's just a different variation of normal. Right. If that makes sense. Yeah. Totally makes sense. I'll go with that. Kyle Scalind, she is an economic content creator.

She is on all the socials, and you should subscribe to her newsletter because she will make you really, really smart. Kyle, thanks a lot. Appreciate you time. Thank you. Wall Street today, not nihilism, but I'll tell you what, traders are definitely waiting to see which way the inflation winds are blowing. We will have the details when we always have the details.

Federal Reserve Bank of New York this morning came its quarterly report on household debt and credit. Big picture, household debt overall fell in the second quarter. For 17 straight quarters, though, that is more than four years. I'll do the math for you. Helox, home equity lines of credit, have been going up. Marketplace's Kristen Schwab reports. Borrowers tend to use home equity lines of credit to fund big purchases. And the data show that's what they're using them for now, says Susan Walker, a professor of real estate at Wharton. They're using it for home renovation. They're using it to send their kids to schools, using their house as a piggy bank, essentially.

Home equity lines of credit are the piggy bank of choice because rates have gone down. The average interest rate on a credit card is just under 20%. On a personal loan, it's more than 12%. A helock, on average, sits at about 7.5%. It's a far less expensive. way of borrowing. Surges in Helox tend to mean borrowers are feeling confident in the economy and in their own personal economies. Andy Walden is head of mortgage and housing market research at Intercontinental Exchange. They're typically reserved for very high credit quality individuals. It's not uncommon to see

760, 780 credit scores for folks that are taking out lines of credit. And homeowners are especially confident now because of rising home values. Walden says the average American homeowner has more than $210,000 in tapable home equity. Half of that equity is held by folks that have an interest rate on their first mortgage that's below three and a half percent. Plainly put, people who bought homes during the pandemic are feeling more flush, so they're using their equity to stay put, remodel, and get ahead. But Linda Bell, a homelending expert at bank rate, cautions against banking on your home's

value as well. I think a lot of people out there, house-rich cash-bore, and this could be very dangerous because you feel like I have all this money, but you need to be responsible and understand that you can pay it back. He-lock delinquency rates are historically low, but they tend to rise when borrowing costs go up and when the economy slows. I'm Kristen Schwab for Marketplace. Here's another one from that New York Fed report. More people are delinquent on their credit cards now that in any point since the Great Recession, about $1,000. 13% of all credit card balances are 90 days or more overdue. A lot of people, though, actually fell into delinquency coming out of the pandemic, and that debt is still following them around.

Marketplace of Samantha Fields has that one. The early part of the pandemic was a terrible time in so many ways, but it was an oddly good time for many people financially. Federal supports, including like stimulus payments, expended unemployment benefits, helped a lot of families to stabilize their finances. Brenno Braga at the Urban Institute says in the first couple of years of COVID, there was a notable decline in credit card delinquencies. But then what happened was after those programs expired, the environment became much more difficult for families.

They saw a rapid increase in the price of goods, such as like food, housing, and transportation. And we saw a rapid increase in the number of people falling behind on their credit card payments. Josh Bivens at the Economic Policy Institute says, More recently, the number of new delinquencies has stabilized. But it's at a level that's higher, I would argue, than it should be, given, like, a pretty low unemployment rate in the economy? Part of the reason for that is a lot of people are still carrying around those old debts they

fell behind on, says Joelle Scally at the New York Fed. Once people miss a payment on their credit card, that sticks around on their credit report for some time. And she says lenders are now reporting and chasing late payments for much longer than they used to. So even though a lot of these credit card delinquencies aren't new, Aaron Klein at Brookings says they are still affecting people's lives. This debt overhang of people who have defaulted hasn't gone away for the millions of families affected. They're still getting called by debt collectors, their credit scores are still lower. And all of that, combined with persistent inflation and a

frozen job market, is making it hard for many to catch up. I'm Samantha Fields for Marketplace. up. Wow. So this is what terrorists are all about. I've been trying to tell you, gang. First, though, let's do the numbers. Dow Industrial's down 184 points today. 310% closed at 53,7991. Nasdaq down 159.6% 26,000 to 445. The S&P 500 down 24 points, about 310% 77 and 28. Credit cards, you say? Mastercard, dropped three tenths of one percent. Today, Visa shares rose six tenths percent. American Express up about six tenths percent as well. Chris was telling us about Helox. Well, we'll go elsewhere in housing news.

How about that? Existing home sales declined 1.7 percent in July. That's the National Association of Realtors. Related last week, the 30-year fixed rate mortgage, almost 6.7 percent, 6.66 is what I saw. You chew the math. You're listening to Marketplace. This is Marketplace. I'm Kai Rizdahl.

It's not a stretch at all, I think, to say that this second quarter of the 21st century is going to turn in very large part on the tensions between China and the United States and that those tensions in turn hang on the technological competition between the world's two biggest economies. New Yorker, staff writer Evan Osnows, spent eight years living in China in the early years of this century. And he went back this summer for a reporting trip on the subject at hand. Evan, thanks for coming on. Thanks, Kai. It's great to be here. I want to start with sort of an atmospheric question here. You say at one point in this piece that Beijing is so much quieter now, literally quieter than when you live there. Talk about that for a little bit. Yeah, it's very noticeable, actually. I mean, partly it's electric vehicles. A lot of the cars on the road are electric and they're silent. And then the other thing is that it has the world's largest e-commerce market, meaning there's really almost nothing you can't get delivered. And so, people don't have as much reason to go out. It does create a slightly strange sense of quiet in the place. This is all by design, right? It's part of the plan. It is. Yeah, China likes plans. And they

set out about the five-year variety in any case. Exactly. And also even longer term. I mean, in 2015, they came up with a plan called Made in China 2025. And it seemed like it was over the horizon. But what they said was, we want to be leaders. a whole range of technologies. So things from lithium ion batteries and electric vehicles to eventually robotics and AI and things like that. And the Chinese system can go overboard in a whole range of ways. They, for instance, built too much housing. But when they set about building something like technology, it very often comes to pass. You know, it's interesting you mentioned housing because one of the things you point out in this piece is that it seems, and analysts say this to you,

that they are trying to, in their investments in technology and what they're doing now, they are trying to outrun the mistakes of the past, one of which was the huge property bubble. Yeah, that feels very noticeable. The property bubble, which started to burst in 2021, is really the biggest thing people talk about. And there are these buildings on the edges of cities that are called Lanwe-Lo, basically rotten-tail buildings in Chinese. And these are buildings where they never finished construction. For most people, it's a sign of the mistakes of the last decade. And so the government has said, all right, one of the ways we're going to try to rekindle growth, and it's controversial, it may not work, is by plowing investment into technology and saying we're going to seize this moment and see if we can race ahead into the future.

So let's talk about some of the things that on the surface anyway look super impressive. The amount of electricity that they are producing, the strides they've made in AI, electric vehicles. there are some real technological achievements that Xi Jinping has been able to engineer. Yeah, you know, I tend to think it's the Chinese people themselves have been able to do this. Look, there is a tremendous amount of engineering talent in China. Every year they churn out more graduates in science and engineering. And part of it is they've taken advantage of a moment in America. As a scholar, a Canadian scholar named David Zweig, he mentioned to me that,

If you look at the new labs that have been formed at a university like Westlake University, many of them are returnees from the United States who felt alienated from where they had been before. You mentioned this moment in America and everybody listening to this understands what this moment is. But it is a moment of American withdrawal, intentional, very impactful in a lot of ways. Does that necessarily, though, mean that the way is cleared for China's rise? I don't think it does. What it does is it creates an opportunity for China. And in some cases, they've seized it. You know, it's not accidental, for instance, that China rebranded its foreign assistance program, China aid. But at the same time, a lot of countries, and I heard this when I was in Europe earlier in the year, a lot of countries are feeling like they're caught between two big powers. the United States and China, they don't really trust either of them at the moment. And so it's created a system where the U.S.-led order is in some disrepair, but it's not being replaced by a Chinese order. Instead, we're getting a period that's something closer to the jungle, what an analyst in Europe described to me as a period of unorder, where each country is building up its military, using its leverage, its choke points in global trade.

So we're entering a period like that rather than simply slipping into a new Chinese led order. That implies some degree of chaos in the years and decades to come. Well, it brings me no joy to say it, but I think a fair assessment is that the chaos that we see around us these last couple of years is a sign of these deeper structural changes. And we are smart to be clear right about it. You end this piece going to a fortune teller who I will point out here. got you for 660 you had about $97. It's a fair trade. You know, you're happy with it, right?

So do a little fortune telling of your own. And let's say you go back in 10 years to Beijing to report another piece. What's that going to look like? I think on the surface, there's going to be a lot of ways in which AI is going to be part of people's lives. Already, for instance, you can't take out the trash, literally, without encountering AI. There are cameras that keep an eye on whether people's. people are sorting their trash efficiently. But at the same time, there is a real unease, ordinary people, particularly young people

in China, very uncomfortable about what the future holds. They don't feel like they have a voice in the shape that AI is going to take. They're not having kids. They're not getting married. We see some similar traces in the United States. And so the real question that faces both, I think, China and America is can we figure out ways to make sure that people, ordinary people, have a hand in. shaping how these technologies become part of our lives and our economies. Because it's the country

that figures out how to do that that I think is going to prevail in this technology race, which is about more than just who has the superior tech. Evan Osnios, he's a staff writer at the New Yorker. Great Peace about China and the rise of technology over there and what it means for us. Evan, thanks a bunch. I appreciate your time. My pleasure. Thanks for having to come. Hey, so here's something. Small business owners were more optimistic in July than they have been in almost a year. So said the National Federation of Independent Business this morning. And as it happens, that optimism coincided with a rise in the share of business owners

who said they are looking to hire over the next three months. Hiring, however, ain't always easy as Marketplace's Henriette reports. Ariel Voorhees runs a personal chef service in Vermont. She grocery shops and cooks for families in their homes. And business is good. She's had to hire to keep up with demand. In the past six months, actually, we've grown from two chefs working in the business to four chefs. And she may bring on yet another chef in the next few months.

About 20% of small firms are in the same boat, according to the National Federation of Independent Business Index. But wanting to fill a position and actually filling it with the right person are two very different things. Peter Hansen is Director of Research and Policy Analysis at NFIB. They're going to the market trying to fill these positions, and they're noticing, hey, the number of applicants, the kind of skill level and fit of these applicants isn't what I hope for it. That's true for Chris Kessler, who owns Black Flannel Brewing and Distilling Company in Essex, Vermont. His brewery has a restaurant, and it's been hard, he says, to fully staff up. The labor shortage, especially in Vermont hospitality, is real. And, you know, we're still looking for a couple of kitchen people.

Kessler attributes that mostly to a restaurant industry workforce that shrank in the pandemic and never fully recovered. Other businesses see a more recent cause for the lack of skilled workers, the Trump administration's immigration crackdown. Alexis Demado Falvi, with the advocacy group's small business majority, says the threat of deportation is keeping some employees from going to work. It's more and more difficult for people to feel that they want to come risk their ability to remain in the U.S., even if they are here legally present. And that points to another finding in the NFIB survey. Even as more business owners feel optimistic, the share that feel uncertain is also rising well above historical norms. I'm Henry App for Marketplace. If we're talking small business confidence, we've got to hear from one of our small businesses, don't we?

Eric Vaughn owns Eric's I've Been Framed. That's a picture framing shop in Detroit. Just yesterday, I had to order some molding from a company. that's based in Canada, but they have warehouses all over the states. And they didn't have the particular moldings that I wanted, but in Canada. And so, you know, after I placed the order, she said, Eric, I'm sorry, but I'm going to have to add 17% onto the bill. And I'm like, wow.

So this is what terrorists are all about. So, you know, another 17% doesn't hurt the bottom line in this, but if I have to do it all the time, oh yeah, it would be a different story. Everything has gone up. I just got to notice that map boards were going up in pricing. Transportation, everybody's got the extra fuel charge and the distributors. A few of them, they offer discounts on glass, because a lot of times glass and acrylic, they use petroleum to make it.

So it fluctuates, and it fluctuates because of what's going on. in the world, and that has an adverse effect on the business. So yeah, it's crazy out here, but, you know, I have to pass it on to the client. We've been busy. We just came off of a exhibit. A young photographer from Southwest Detroit has a show called Lo-Riders from Detroit to LA and back. It was about 55 pieces and we had to use acrylic instead of glass because he said that it was going to be a traveling exhibit. So the challenges that I had with the acrylic is that, you know, once you pull the plastic protective off of the acrylic, dust and particles that's in the air kind of jumps to it. There was a lot of dark areas in the photograph.

So any little spec will show up. So that was probably the most challenging project I've had since I've been in business. And I've been in business over 30 years. But yeah, I never felt in this particular case, I've got paid enough. But it's a learning lesson, and I know not to touch it ever again. Eric Vaughn's still learning lessons. Eric's I've been framed is his shop. Detroit.

Michigan is where he is. This final note on the way out today, keeping track so you do not have to. The Strait of Hormuz is still closed. Brent Crude bumped up against $90 a barrel. Today, here, though, is the gas price that really matters. Think trucks, right? Diesel, $5.32 each and every gallon. Jordan Manjee, Zaniel Maharaj, Janet Wynn, Olga Oxman, and Virginia K.

Smith are the digital team. I'm Kyle at Risdahl. We will see you tomorrow, everybody. This is APM.