As Trump’s trade war sends tremors across the world economy, the American working class is neck-deep in a full-blown cost-of-living crisis. Inflation officially peaked in 2022, but relative to price increases, working-class living standards have not rebounded from the debilitating 19% cut in average real wages.

We are well into capitalism’s imperialist stage, where monopolies rule the roost. Their greed knows no bounds. Even amid high inflation, they pursue the short-term goal of maximizing profits rather than ramping up production of goods to stabilize prices, while potential new competitors are throttled in the cradle by the high cost of entering the market.

The result is an almighty squeeze on consumers. Inflation on basic, everyday goods lines the pockets of the monopolies. In a sense, it is a tax on the working class for the right to live in this rotten system. As the next recession looms and fear rules the markets, what do personal finances look like for working people in 2025?

Drowning in debt

As above, so below—the “world’s strongest economy” is perforated, top to bottom, with weaknesses. The workers are drowning in debt, while the ruling class plans to cut social spending to stave off its own creditors. As sluggish growth and persistently high prices continue to take their toll, people have been breaking out their credit cards and taking out loans for regular necessities like utility bills, hygiene products, fuel, medications, groceries, etc.

In an effort to make ends meet, household consumer debt has increased dramatically. It rose $93 billion to reach $18.04 trillion in the fourth quarter of 2024 according to the New York Fed. That’s the highest balance since tracking began in 1999, and a 57% increase in less than four years. Consumer debt in America is now more than the combined GDP of Germany, Japan, and India.

Buy now, pay later

A growing proportion of this debt is in non-housing balances: auto loans, student loans, and above all, credit cards. So-called “Buy Now, Pay Later” (BNPL) loans rose by an incredible 1100% between 2019 and 2021, and are expected to see compound growth of over 20% year over year.

This is effectively “phantom debt.” BNPL loans are unreported to credit agencies and tend to casualize taking on debt for everyday goods. Though they artificially expand the market, they saddle consumers with extra debt, which many won’t be able to pay off.

The scheme is similar to the “layaway” or “rent to own” system, which was largely supplanted by credit cards in the 1980s and ‘90s. Conceived during the Great Depression, layaway allowed workers who did not have cash in hand to buy everyday items and work out a payment arrangement with individual shop owners.

Consumer debt represents a serious problem for the capitalist system: when recession hits, demand will utterly collapse, not only because of the “natural” characteristics of a downturn like job losses, evictions, and further inflation, but also from the weight of debt accumulated by households since 2020.

2024 saw a rise in what creditors call “serious delinquency”—90 or more days of past-due debt—for auto loans, credit cards, and home equity loans. More than nine million student loan borrowers who are far behind on debt will lose federal protections this year. This means tens of millions of credit scores will tank merely for trying to keep up with basic expenses.

Anxious, ashamed, and angry

Securing employment, housing, and education are increasingly dependent on credit scores. The current downward spiral will lead to a negative feedback loop of destitution, dislocation, and mental health problems.

Debt anxiety is endemic; 75% of Americans report that they think about their debt frequently, often multiple times a day. Four in 10 Americans report feeling anxious, overwhelmed, frustrated, ashamed, angry, scared, embarrassed, and hopeless about their debt. 53% of student loan borrowers report that they have experienced depression because of their debt, and one in 15 student loan borrowers surveyed have considered suicide due to their student loans.

As always under capitalism, some sections of the capitalists are making a killing off the working majority’s desperation. With the dramatic increase in the use of plastic, credit card companies are raking in massive profits from interest and transaction fees. Visa reported a 15% rise in profits to $17.3 billion in 2023—for a net profit margin of 53%. Likewise, Mastercard reported their net profit margins stood around 49%. By contrast, the average net profit margin for the retail sector in 2024 was only around 3%. Being a financial parasite pays well when the working class is forced to borrow just to survive.

“Unfit to rule”

These debts will never be fully paid back. The capitalists cannot provide enough jobs with high enough wages to satisfy the creditors while providing enough for workers to live on.

This brings to mind the following lines from the Communist Manifesto:

And here it becomes evident that the bourgeoisie is unfit any longer to be the ruling class in society and to impose its conditions of existence upon society as an overriding law. It is unfit to rule because it is incompetent to assure an existence to its slave within his slavery, because it cannot help letting him sink into such a state that it has to feed him instead of being fed by him … What the bourgeoisie therefore produces, above all, are its own grave diggers. (our emphasis)

In 1786, Revolutionary War veteran Daniel Shays led an army of yeoman farmers in an insurrection against unpayable debts owed to the nascent American capitalist class, who evicted them from their homes and threw them into debtors’ prisons.

Close to 240 years later, the same seeds that sowed Shays’s Rebellion have been planted again. This time, they will grow into a powerful workers’ movement, leading ultimately to a workers’ government that will eliminate all debts—household or otherwise.

No one should have to endure the humiliating shackles of debt servitude because they dared to pursue an education, provide a home for their family, or buy diapers and baby formula. While the Democrats and Republicans represent the interests of the usurers, communists are organizing a class-independent party to break the chains of capitalist bondage and wage slavery.