U.S. Consumer Spending Trends: Insights from Equifax Market Pulse Report

Equifax's recent release of the Market Pulse Second Quarter report for 2025 unveils significant trends in U.S. consumer credit. This comprehensive analysis highlights how consumers are continuing to spend while also managing their debt levels. Yet, underlying challenges are evident, especially among subprime borrowers who are increasingly struggling to keep up.

Stability in Consumer Spending

As per the report, total U.S. consumer debt has reached an impressive $17.86 trillion as of June 2025, marking a notable increase compared to the previous months. Specifically, the delinquency rate for all consumer debt has remained steady at 1.5% for three consecutive months, reflecting a steady-state in consumer credit health. However, it's essential to understand that while consumers at large are managing their finances effectively, there exists a growing disparity among different borrower categories.

Equifax highlighted a significant K-shaped recovery, where households in the subprime category are lagging while higher credit-worthy borrowers continue to enjoy stability. While the overall debt has increased by 2% year-over-year, the share of credit card debt held by subprime borrowers has surged, raising concerns over their financial situation.

The Subprime Challenge

Previously, during the pandemic, the proportion of credit card debt held by non-prime borrowers witnessed a decline, supporting their management of loans with government stimulus and reduced discretionary spending. Fast forward to May 2025, and the share of subprime borrowers has reached 22.1% of all bank card debt, a staggering 50.9% increase compared to lows experienced in 2021. This demonstrates a shift in landscape, where subprime borrowers now hold significantly more credit card debt than they did before the pandemic.

The total bank card debt for subprime individuals has jumped 135% to $233.1 billion as compared to figures from May 2021. In contrast, the overall consumer bank card debt grew by only 54% during the same period. This alarming increase underscores the growing burden on subprime borrowers to manage their financial commitments.

Deteriorating Student Loan Landscape

The student loan sector has also posed significant challenges, especially post the pandemic. After a five-year pause, delinquent student loan reports resumed, leading to noticeable spikes in severe delinquency rates. The report indicated that delinquency increased from 6.48% in March to 18.73% in May before slightly reducing to 17.95% in June.

The total outstanding student loan debt has sharply decreased to $1.33 trillion in June 2025, an 11% decline year-over-year. Furthermore, the number of active accounts fell significantly, indicating a shift in borrowing behavior among students and graduates. These changes illustrate the precarious financial landscape in which many borrowers find themselves, further complicating overall credit trends.

Bank Card Stability Amidst Fluctuations

Interestingly, bank card balances have shown resilience, posing a counter-narrative to the struggles of subprime borrowers. Traditional credit card balances climbed to $1.07 trillion, with delinquency rates decreasing to 2.79%, down from peaks witnessed in late 2024. Write-off rates also declined, suggesting banking institutions are becoming more stable in their lending practices.

However, growth in auto loan and lease debt was marginally lower at $1.68 trillion, with leases showing promising growth compared to traditional loans. Delinquencies in auto loans ticked up slightly, but leasing options are becoming more attractive to consumers facing high vehicle prices and elevated interest rates.

Conclusion: A Diverging Landscape

Equifax's Market Pulse highlights an evolving consumer spending landscape in the U.S. While general spending activity and management of debts appear stable, underlying inequalities are becoming pronounced. As the economy continues to recover, the immediate focus should be on supporting subprime borrowers and addressing their financial challenges. Monitoring these trends will be crucial for understanding future credit behaviors and potential interventions needed within the market.

For more insights and detailed reports, individuals can access Equifax's resources available on their official site. The company continues to monitor and report on consumer credit trends, ensuring stakeholders have comprehensive access to data-based decision-making tools.