US Economy Shows Stress with Rising Credit Card Defaults and Bond Sales

The U.S. economy is facing significant stress as credit card defaults surge and global investors reduce their exposure to U.S. government bonds. This reflects growing household debt due to high interest rates, inflation, and rising living costs, coupled with concerns over global uncertainty.

Thu May 21 2026

Escalating Household Debt Crisis in the US

Two major financial warning signs are flashing in the US economy. Firstly, Americans are falling behind on credit card payments at the fastest pace in over a decade. According to data tracked by the Kovecsi Letter, credit card defaults overdue by more than 90 days have risen to 13.1%, the highest level since 2010. This indicates that more households are struggling with debt, high interest rates, and rising living costs. The stress is building even faster than it did during the 2007-2008 financial crisis.

Global Investors Selling US Bonds and Rising Yields

The second warning sign is that global investors are slowly pulling back from US government debt. Countries like China and Japan have reduced their exposure to US Treasury bonds as concerns rise over inflation, high borrowing, and global uncertainty. Concurrently, the US 30-year bond yield has touched its highest levels since 2007. Higher yields mean the US government has to pay more to borrow money, which can eventually affect loans, mortgages, and global markets.