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A Recession Only Renters Can Feel
Article originally posted in the Globe St on Nov. 10, 2026.
Over the past year, more than one in eight American renters have fallen at least 60 days behind on a loan payment, the highest share since the Federal Reserve started keeping records in 1989.
Over the same period, homeowners with mortgages have mostly stayed current, and when The Economist worked through the numbers, it found the gap between the two groups growing while the wider economy expands. Higher rents, small cash cushions and the return of student-loan bills are hitting the third of U.S. households that rent much harder than those that own.
The Fed’s latest Survey of Consumer Finances, released in October, shows how far apart the two groups have drifted. A different Fed survey, taken in late 2025, found that a quarter of renters had not paid all their bills in full the month before. Among mortgage-holders, the figure was one in ten.
About one in six renters said they found it “difficult to get by,” which is more than three times the rate for people with mortgages.
A Reversal From the Last Crisis
This is the reverse of the last big housing shock. During the 2007-09 financial crisis, owners took most of the damage. By 2010, one mortgage in 20 was in foreclosure and one in ten was delinquent. Home prices had dropped by almost a quarter and close to one in four owners owed more on their homes than the homes were worth.
Today the people under pressure are the ones who never bought. Jacob Ramirez, a 31-year-old operations manager for a café chain, lives in Pomona, east of Los Angeles. He started putting textbooks on a credit card in college. After he graduated, he sometimes used the card to cover rent and utilities. By 2022, he was living in a one-bedroom apartment with his wife and their dog.
Rent kept going up, along with his other costs and he described the squeeze as “like an anaconda snake choking me out.” By 2023, he owed $28,000 across five cards and went to a nonprofit debt-counseling service. He expects to be debt-free by 2028.
More Than Demographics
Some of the difference between renters and owners comes down to who they are. Renters are generally younger, earn less and have less education. In 2025, the median renter household made $57,000, compared with $103,000 for homeowners. By The Economist’s estimate, though, those factors account for only about three-fifths of the difference in financial distress. Other forces explain the rest.
Rent is the most obvious one. Census Bureau figures show rents up 42% since 2019, while renter household incomes rose 34%. Housing costs for mortgage-holders also grew faster than their incomes, by a similar margin, but the burden falls differently. Much of the increase on the ownership side comes from new buyers, and lenders checked that those buyers could afford their payments, which usually stay fixed for years. Renters get a new price each time a lease ends, and they have to pay it whether or not their income has kept up.
Thin Savings and Student Debt
Savings are the second factor. The Survey of Consumer Finances puts the typical renter’s liquid savings at $2,000. For a mortgage-holder, the figure is $12,000. Owners are also more likely to have sizable investment accounts they can draw on.
“A lot of homeowners are supporting their spending by withdrawing from their brokerage funds,” Ted Gayer of the JPMorganChase Institute, a research group inside the bank, told The Economist.
Student loans made things worse. Payments restarted after the pandemic pause and that accounts for about half of the recent increase in renters falling behind on debts. Among mortgage-holders, it explains only about a quarter of the increase.
Turning to Costly Credit
The pressure shows up in other bills too. The Economist looked at data from the FINRA Foundation, controlling for income, age and other demographics. Renters used to be less likely than mortgage-holders to be charged late fees on credit cards. Now they are more likely.
More renters are also using expensive short-term credit. A Fed survey found that more than one in ten took out a payday loan or a paycheck advance in 2025, nearly double the share in 2019.
All of this leaves very little room to save.
“As rents increase, the ability to save, whether it’s for a down-payment, for an emergency, for whatever, is really much harder,” said Whitney Airgood-Obrycki of Harvard University’s Joint Center for Housing Studies.
Ramirez hopes to start saving for a home of his own once his cards are paid off. Many other renters are further from that point. The Economist’s analysis raises a real question about whether the country is in a recession that only renters can feel.