Soaring household debt is a warning to the US economy: SocGen

Société Générale warned that rising household debt and shrinking savings have put the US economy in a difficult spot. Fed data show total liabilities among US households reached a record $19.9 trillion at the end of the first quarter, while the personal savings rate fell to 2.6% in April, per the Bureau of Economic Analysis.

The figures suggest Americans are continuing to borrow to fund their spending. Albert Edwards, a SocGen strategist, linked the pattern to the so‑called wealth effect, where gains in assets such as stocks and real estate make people feel richer and spend more. The stock market's rally tied to enthusiasm about AI has amplified that effect, leaving growth increasingly exposed to the AI trade.

Consumer spending accounts for around 70% of US GDP, the Boston Fed estimated last year, even as measures of household income growth have started to fall: personal income excluding transfers contracted $16.5 trillion in April, down around $200 billion from its peak in 2025.

United States

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