Household Debt Eases Business Defaults Rise May

Household debt trends show mixed signals globally and domestically, with some sectors stabilizing while others face increasing challenges. In New Zealand, household debt appears to be easing slightly, with a marginal decrease in arrears and mortgage troubles, though financial hardship cases and business liquidations, especially in construction, are rising. Similarly, in India, household debt as a percentage of GDP has slightly decreased but remains elevated compared to previous years, with non-housing retail loans growing and risks concentrated among lower-rated borrowers. In the U.S., inflation remains somewhat contained, but consumer finances face growing strain as personal income and spending decline, exacerbated by a sharp rise in student loan delinquencies that threaten access to credit for many millennials and Gen Z borrowers. Federal student loans maintain fixed interest rates unaffected by Federal Reserve rate changes, but private loans with variable rates respond directly to Fed decisions, influencing borrowing costs. Overall, while household finances show resilience in some areas, increasing delinquencies and business failures highlight ongoing economic vulnerabilities amid a backdrop of slow growth and cautious monetary policy.