Fed survey: median family income up 7%, but 8.6% of families now spend over 40% of income on debt

The Federal Reserve on Friday released the 2025 Survey of Consumer Finances, its once-every-three-years look at what American families own and owe. Reuters framed it as rising income, wealth and debt stress between 2022 and 2025. All three are in the data, but the headline numbers point in different directions, and the useful part for a business owner sits further down the Fed's summary report.

Median up, mean down: read both

Real median family income rose 7% to $82,200 between the 2022 and 2025 surveys. Real mean family income fell 6% to $145,200. The Fed says families at the lower end of the distribution saw modest gains while those at the top saw declines. So the typical household is better off in real terms, and the average dropped because the highest earners earned less.

Net worth moved the other way. Real median net worth rose 2% to $215,900, while real mean net worth rose 7% to $1.24 million. The mean outran the median, which is the usual signature of gains concentrated at the top, in this case driven by the stock market and house values, according to the Fed.

The debt number that changed

The share of families with any debt barely moved, at about 77%. What moved is the burden. The share of families whose debt payments take more than 40% of their income rose from 6.5% to 8.6%. The Fed's report calls that the largest share since 2010; its press release describes it as a level last seen in the 2013 survey. The median payment-to-income ratio among debtors rose 2.0 points to 15.4%.

The Fed ties this to what borrowing costs did over the period. Between 2022 and 2025 the average 30-year mortgage rate rose from 4.2% to 6.7%, new-vehicle loan rates from 4.9% to 7.7%, and credit card rates from 14.6% to 21.4%.

Measure	2022	2025
Families with debt payments over 40% of income	6.5%	8.6%
Families behind on loan payments	about 12%	almost 20%
Two months late or more	5%	more than 8%
Families carrying a credit card balance	45.2%	44.7%
Median card balance	$2,950	$3,100

The 2022 median card balance is derived from the Fed's statement that the median rose $150 to $3,100. The Fed says families were more likely to be behind on obligations than at any point since the 2010 survey.

What the card rate does to a typical balance

A family carrying the median $3,100 balance for a year pays about $664 in interest at 21.4% and would have paid about $453 at 14.6% (our calculation, ignoring compounding and payments). That is roughly $211 a year more on a balance that did not grow much. Multiply that across a customer base and it is a small, steady drain on discretionary spending, which is where a salon, a restaurant or a repair shop earns its margin.

The part for owners: business equity

About 15.4% of families owned a privately held business in 2025, up almost a point from 2022. The Fed says the increase came entirely from the bottom 90% of the income distribution, while ownership in the top decile declined. Only 8% of families in the bottom half of income own a business, against 40% in the top decile.

The value tells a harder story. Among owners, median business equity fell 23% to $75,400 in real terms, and the mean fell 12% to about $1.57 million. For the bottom half of income, the real mean value of a business fell about $59,000 (18%); for the upper-middle group it fell about $128,000 (22%). Only the top decile saw a real mean increase, around $98,000 (2%). In other words, more ordinary households have started businesses, and those businesses are worth less than the ones that existed in 2022.

That matters when an owner goes to borrow against the business. If the business is the collateral or the owner's main asset, a lower valuation and a higher payment burden on the household side both shrink what a lender will extend.

605,380 independent restaurants are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 79,108 in CA, 54,058 in TX, 51,387 in NY. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

112,779 independent retail stores are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 14,307 in CA, 9,799 in TX, 9,064 in NY. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

What it does not say

The survey compares 2022 with 2025, so it is a baseline, not a read on today. Consumer sentiment is a separate measure; see our note on this morning's sentiment reading for the more current mood. The survey also cannot tell us how many of the 8.6% are stretched by a mortgage rather than a card, though the Fed notes that debt scaled against assets looks healthier, with the median leverage ratio falling to 26.9%.

For owners watching customer health, the practical read is the gap: a typical household that is ahead on income and net worth, and a growing minority paying a large share of income to lenders and falling behind on payments. Both are customers.

Sources: Federal Reserve Board press release, Oct. 9, 2026; Changes in U.S. Family Finances from 2022 to 2025; Reuters. Survey conducted for the Board by NORC at the University of Chicago. This is market information, not investment advice.