Investing Through Financial Distress

Investing Through Financial Distress

Financial pressure can make it difficult to think beyond the present. Yet periods of uncertainty have always been part of investing, making a long-term perspective more important than ever.

Created in partnership with New York Life Investment Management, this visual examines how financial strain is affecting both the broader economy and American households, while highlighting why staying invested can matter during volatile markets.

U.S. Debt-to-GDP Near All-Time Highs

America’s debt burden has grown steadily over the past several decades. Household, business, and government borrowing have all contributed to total debt reaching historically elevated levels.

While debt has fallen from its pandemic-era peak, it still exceeds 250% of GDP, far above the long-term average of roughly 180%. Higher debt can leave the economy more vulnerable to rising interest rates, slower growth, and persistent inflation.

These challenges extend beyond government finances. Higher borrowing costs affect businesses and consumers alike, creating financial pressure that can eventually show up in household budgets.

Mortgage Delinquencies Are Rising in Many States

Those economic pressures are becoming more visible across the country. As borrowing costs remain elevated, more homeowners are falling behind on their mortgage payments.

In the first quarter of 2026, mortgage delinquency rates increased in 31 states compared with the end of 2025. Vermont recorded the largest increase, followed by Delaware, Louisiana, Florida, and Montana.

Conditions vary by region, but the broader trend suggests many households continue to adjust to a higher-cost environment. Financial stress at home can also influence how people approach investing.

The Cost of Cashing Out of the Market

Periods of market volatility often encourage investors to move into cash. While that may feel like a safer option, it can also mean missing some of the market’s strongest recovery days.

On April 9^th, 2025, the market gained nearly 10% in a single session. Investors who had already exited the market would have missed that rebound, demonstrating how quickly sentiment can change.

No one can consistently predict when markets will recover. Staying invested allows investors to participate in those recoveries instead of trying to time them.

Keeping a Long-Term Perspective

Economic uncertainty and financial strain can make it tempting to focus on short-term risks. However, history shows that reacting emotionally to market volatility can come at a cost.

While every investor’s situation is different, maintaining a diversified portfolio and staying focused on long-term goals may help investors navigate periods of financial stress with greater confidence.

Explore more insights from New York Life Investments