New York Fed President Williams Says Widening U.S. Household Wealth Gap Is Shaping Spending and Borrowing Trends

The U.S. economy is showing a K-shaped divide. High-income households are spending more as they benefit from gains in stocks and home prices, as well as mortgage refinancing in 2020–2021, while low-income households face pressure from prices, tariffs and borrowing costs. The Federal Reserve Bank of New York believes this divide will affect consumer spending, credit quality and interest-rate policy assessments.

On March 3, 2026, New York Fed President John C. Williams said tariffs had added 0.5–0.75 percentage points to an inflation rate of about 3%, while mortgage delinquencies were more pronounced in low-income areas. A TransUnion report released on April 30 showed that non-mortgage debt-to-income ratios for near-prime and subprime borrowers rose by 176 and 143 basis points, respectively, from the fourth quarter of 2019 to the fourth quarter of 2025. Credit card balances reached $1.12 trillion in the first quarter of 2026.