United States: Economic Resilience Hides Credit Structure Divergence

In recent years, the United States has undergone the most aggressive monetary tightening cycle in nearly four decades. Although the Federal Reserve began cutting interest rates last year, current rates remain significantly above pre-pandemic levels. Mortgage rates for households have hovered around 7% for a prolonged period, and corporate financing costs are also at historically high levels. According to traditional logic, high interest rates typically suppress credit expansion, curb demand, and ultimately drag down economic growth. However, the U.S. economy has not experienced a notable recession, with consumption, employment, and corporate investment all showing considerable resilience.

So the question arises: in an environment where private sector financing activity remains subdued, what is supporting U.S. economic growth?

From the perspective of credit creation structure, the answer lies in fiscal policy and AI investment. As shown in the chart below, newly added financing in recent years has focused mainly on the government sector and certain AI-related investment areas, while financing activities in the household and traditional corporate sectors have been significantly below historical averages.

Share of new credit by U.S. sectors as a percentage of GDP

This change is not difficult to understand. In the past few years, the U.S. fiscal deficit has remained elevated, with large-scale government spending serving as a strong support for overall demand. At the same time, the wave of artificial intelligence has fueled rapid growth in capital expenditures for data centers, computing power infrastructure, and related industry chains. Compared with households buying houses or cars, or traditional enterprises expanding production, these fields are less sensitive to financing costs. Thus, even in a high interest rate environment, financing demand in these sectors remains robust.

However, shifting the focus to the private sector reveals a different picture. The percentage of U.S. households that are over 90 days delinquent on credit cards and auto loans is already close to historical highs, indicating that high interest rates have indeed imposed significant constraints on household behavior.

AI investment has magnified the K-shaped divergence among households and businesses.The reach of the technology sector remains limited, and most traditional U.S. industries continue to be under pressure. Bank of America data shows that the current gap in income growth rates between high-income and middle- to low-income groups in the U.S. is significantly higher than in past years. On the business side, small business credit demand has not expanded, diverging from that of medium and large enterprises.

In the medium to long term, a K-shaped growth structure deserves more attention than merely discussing economic resilience. Weak private sector credit is not yet driving market trends, but it does highlight an often-overlooked reality: current U.S. economic strength relies more on fiscal and AI investment support, while the breadth of demand expansion is notably lacking. Geopolitical and inflation factors have slowed the monetary cycle, but there will eventually come a day when high interest rates become unsustainable.