Debt is on the rise

Summary

Marketplace Morning Report Podcast Summary

Episode: Debt is on the rise
Date: May 13, 2026
Host: Sabri Benishour
Main Guests: Nancy Marshall Genzer, Scott Kennedy

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Episode Overview

In this concise episode, Marketplace Morning Report delivers key updates on rising household debt in the U.S., shifts in credit and loan balances, the challenges of student loan borrowers (especially among older Americans), and the broader economic and geopolitical context of upcoming U.S.–China talks, including the impact of the Middle East conflict and competition in the field of artificial intelligence (AI). The episode features insights from Nancy Marshall Genzer on household debt trends and Scott Kennedy of the Center for Strategic and International Studies on the complexities of U.S.–China relations.

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Key Discussion Points & Insights

1. Trends in Household Debt

(Starts at 01:02)

• Overall U.S. household debt rose by $18 billion in Q1 2026.
• Credit Card Debt:
  • Slight decrease, falling by $25 billion after typical holiday-season spending.
  • "The New York Fed says credit card balances dipped by $25 billion. Now that's typical because spending usually falls at the beginning of the year after surging during the holidays."
    – Nancy Marshall Genzer [01:29]
• Mortgages & Home Equity:
  • Mortgage balances increased by $21 billion.
  • Home equity lines of credit up by $12 billion, marking the 16th consecutive quarterly increase.
• Car Loans:
  • Balances grew by $18 billion.
• The increases suggest continued reliance on loan and credit instruments outside of credit cards.

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2. Student Loan Default Trends

(Starts at 02:06)

• Student loan balances stable, but defaults rising.
• Notable Insight: About 2.5 million more borrowers defaulted on their student loans in Q1.
  • | Speaker: Nancy Marshall Genzer
    | Quote: "About two and a half million more borrowers defaulted on their student loans in the first quarter of the year. The New York Fed also says they're older, Sabri. On average they're almost 40. And they weren't behind on their student loans before the pandemic. And they are most likely to live in the South." [02:12]
• The demographics of defaulters:
  • Average age: nearly 40
  • Region: Most likely to live in the South
  • Many had not previously been behind before the pandemic
• Reason for Defaults:
  • Many borrowers had paused payments during the pandemic under the Biden administration’s SAVE plan. With the end of the program, missed payments are now being reported to credit bureaus.
    • "They may have been enrolled in...the SAVE plan. Under that plan, they didn't have to make student loan payments because of the pandemic. But that program is ending and borrowers missed payments are now being reported to credit bureaus."
      – Nancy Marshall Genzer [02:36]

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3. Rising Food Prices

(Brief Highlight at 02:57)

• The price of tomatoes up 40% from a year prior.
• Causes: Weather issues affecting harvests and tariffs on imports.
• "The price of Tomatoes was up 40% in April from the year before. Reason being weather issues, messing with harvests and tariffs on imported tomatoes."
  – Sabri Benishour [02:57]

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4. U.S.–China Relations: Economics, Energy, and AI

(Starts at 05:03)

Guest: Scott Kennedy, Center for Strategic and International Studies

A. China’s Position in the Iran Conflict

• China is not eager to pressure Iran too strongly; it views key tensions as emanating from Washington.
• China may benefit long-term as the conflict underscores the importance of an energy transition and positions China as a global green tech supplier.
  • "Getting the US bogged down in the Middle east isn't a bad thing for, for China, of course it hurts their supply of energy...But this conflict also signals...that getting through the energy transition really is important for everyone. And we know which country is most likely to be the best supplier of batteries, electric vehicles, solar, wind."
    – Scott Kennedy [05:40]

B. Competition and Dialogue on AI

• The U.S. and China are fierce competitors in AI development; both believe AI supremacy offers commercial and military advantages.
• U.S. trying to limit China’s progress via export restrictions on advanced semiconductors.
• Despite rivalry, shared concerns (AI “hallucinations,” governance, job loss) may encourage joint discussions on "guardrails" for AI.
  • "There may be some really good reasons why despite their competition...the US and China...should actually have some dialogue about common guardrails that would help not only our two countries, but others as well."
    – Scott Kennedy [06:46]

C. Enduring Economic Tensions

• The economic competition isn’t likely to be resolved by a summit; both nations are vying for technological and industrial leadership.
• Interdependence remains, suggesting both competition and cooperation are needed.
  • "The US and China are now competing for the exact same part of the economic pie...Being connected actually still helps their economies and maybe their national security. So learning how to walk and chew gum at the same time still may be the better option for both of these countries."
    – Scott Kennedy [07:57]

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Notable Quotes

• Nancy Marshall Genzer [02:12]:
  "About two and a half million more borrowers defaulted on their student loans in the first quarter of the year. The New York Fed also says they're older...almost 40...Most likely to live in the South."

• Scott Kennedy [06:46]:
  "Both sides face some common threats from AI...there may be some really good reasons why despite their competition...the US and China...should actually have some dialogue about common guardrails."

• Scott Kennedy [07:57]:
  "I don't think that tension is going to be worked out in this summit and may never be fully addressed...being connected actually still helps their economies and maybe their national security."

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Timestamps for Important Segments

• 01:02 – Overview of latest household debt report and types of debt changing
• 02:06 – Student loan default rates and demographics
• 02:57 – Note on rising tomato prices due to weather and tariffs
• 05:03 – U.S.–China meetings/What’s at stake—energy, Iran
• 06:35 – U.S.–China AI rivalry and scope for cooperation
• 07:45 – Why ongoing economic tensions are unlikely to be resolved

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Tone and Style

The episode adopts Marketplace’s characteristic straightforward, information-rich, yet conversational tone. The interviews are clear, with direct questions and succinct, expert answers that make complex issues accessible for a morning news audience.

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For listeners seeking a digestible update on U.S. household debt trends, the pitfalls facing student loan borrowers, and the stakes of upcoming U.S.–China diplomatic engagements in a volatile global environment, this episode offers vital context and expert perspectives.

Transcript

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[Sabri Benishour]

we are borrowing more and more these days. From Marketplace, I'm Sabri Ben ashore in New York. Household debt ticked up slightly in the first three months of this year, increasing by $18 billion. This is according to a new report from the Federal Reserve bank of New York Marketplaces. Nancy Marshall Genzer is here to break down the report for us. Nancy, so what types of debt are increasing right now? Is this like us maxing out our credit cards or what?

[Nancy Marshall Genzer]

Well, actually, Sabri, credit card debt was down slightly in the first quarter of this year. The New York Fed says credit card balances dipped by $25 billion. Now that's typical because spending usually falls at the beginning of the year after surging during the holidays. Consumers spend a lot less in January. But other types of debt did increase. So mortgage balances grew by $21 billion. Balances on home equity lines of credit were up by 12 billion. That was the 16th cons quarterly increase. And car loan balances grew by $18 billion.

[Sabri Benishour]

I see student loan balances are about the same, but more borrowers are in default.

[Nancy Marshall Genzer]

Yeah, about two and a half million more borrowers defaulted on their student loans in the first quarter of the year. The New York Fed also says they're older, Sabri. On average they're almost 40. And they weren't behind on their student loans before the pandemic. And they are most likely to live in the South.

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[Sabri Benishour]

What's happening with these borrowers? Why are they getting behind on their payments?

[Nancy Marshall Genzer]

Well, Sabri, they may have been enrolled in the Biden administration saving on a valuable education or save plan. Under that plan, they didn't have to make student loan payments because of the pandemic. But that program is ending and borrowers missed payments are now being reported to credit bureaus.

[Sabri Benishour]

All right, thank you Nancy, so much.

[Nancy Marshall Genzer]

You're welcome.

[Sabri Benishour]

President Trump, when asked whether Americans financial struggles were pushing him to cut a deal with Iran, told reporters not even a little bit. The only thing that matters when I'm talking about Iran is they can't have a nuclear weapon. And the price of Tomatoes was up 40% in April from the year before. Reason being weather issues, messing with harvests and tariffs on imported tomatoes.

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[Sabri Benishour]

Trump and China's President Xi Jinping are set to meet in Beijing starting tomorrow. They will talk about the war with Iran, Taiwan. But behind everything is the economics of the US China relationship of the war and the general competition between the two countries. We asked Scott Kennedy with the center for Strategic and International Studies to help us understand how these talks might go. Scott, good morning.

[Scott Kennedy]

Good morning.

[Sabri Benishour]

China's supply of oil is on the line in Iran. President Trump would of course love it if China helped push Iran to make a deal more favorable to the US And Israel, what is China likely to do?

[Scott Kennedy]

I think China is going to modestly push Iran, but China doesn't see this problem as emanating from Tehran, but from Washington. And of course, in this global competition between Beijing and Washington, getting the US bogged down in the Middle east isn't a bad thing for, for China, of course it hurts their supply of energy and about 1 1/2% of their energy needs come from Iran and that's starting to raise prices in China. But this conflict also signals to the rest of the world that getting through the energy transition really is important for everyone. And we know which country is most likely to be the best supplier of batteries, electric vehicles, solar, wind. So in some ways, even if China is facing short term problems because of this conflict in the Middle east, we longer term they may end up benefiting.

[Sabri Benishour]

Reportedly AI may come up at this summit. This is an area of fierce competition between the US and China. What is there to talk about exactly when it comes to AI between China and the us?

[Scott Kennedy]

You're absolutely right that AI is a place where there is extensive competition and rivalry between the US and China because whoever gets to AGI first, the feeling is getting, gets a big advantage, not only commercially but in terms of military competition. And the US has been trying to slow China's AI progress down by limiting their access to advanced semiconductors and equipment. At the same time, both sides face some common threats from AI, potentially like loss of control, hallucinations, AI weapons takeover, jobs being lost to AI. And so there may be some really good reasons why despite their competition with each other, the US and China, which are leading in developing AI, should actually have some dialogue about common guardrails that would help not only our two countries, but others as well.

[Sabri Benishour]

One of the fundamental pillars of the tension that's there is economic competition. Is that tension something that will ever get worked out by a summit between China and the us?

[Scott Kennedy]

I don't think that tension is going to be worked out in this summit and may never be fully addressed because the US and China are now competing for the exact same part of the economic pie. They're both at the high end. That's a central driver, both believe to their economies at home and abroad. Now, in some ways they still are mutually complementary in a variety of different ways. And being connected actually still helps their economies and maybe their national security. So learning how to walk and chew gum at the same time still may be the better option for both of these countries.

[Sabri Benishour]

Scott Kennedy at the center for Strategic and International Studies, thanks very much.

[Scott Kennedy]

Thank you.

[Sabri Benishour]

In New York, I'm Sabri Benishour with the Marketplace Morning Report. From apm, American Public Media.

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