Consumer Financial Fragility Index rises 42.2 points
Economic intelligence firm Estudios Técnicos, Inc. (ETI) reported a renewed increase in financial stress among Puerto Rico households during the second quarter of 2026, as rising loan delinquency, higher unemployment and persistent inflation combined to erode consumers’ ability to meet their obligations.
The firm’s Consumer Financial Fragility Index (ETI‑FFI) climbed to 42.2 points, up sharply from 33.7 points in the first quarter, reversing part of the improvement seen at the start of the year and signaling a broad softening in household financial conditions.
Although the index remains within the moderate fragility band, the second‑quarter reading marks the largest quarterly increase in more than a year. ETI noted that the current level is still well below the pandemic peak of 64.7 points recorded in mid‑2020, but the direction of the underlying components points to tightening pressure on consumers as borrowing costs remain elevated.
The rise in the index was driven primarily by an increase in delinquency on consumer loans, which moved from 2.62 percent to 3.07 percent between quarters. Mortgage delinquency also ticked up, unemployment edged higher and personal bankruptcy filings increased. Real income declined slightly, while credit card interest rates remained near historic highs at 20.94 percent. The fact that all six variables deteriorated simultaneously underscores the breadth of the shift in household financial conditions.
ETI analysts highlighted that the current environment is challenging for consumers who continue to face high financing costs and stubborn inflation. While markets have reduced expectations of additional hikes in the federal funds rate, long‑term interest rates have not eased enough to lower borrowing costs meaningfully. Inflation in Puerto Rico moderated from 4.61 percent in May to 4.21 percent in June, but remains among the highest readings of the past year, limiting purchasing power and reducing the margin available for debt repayment.
Leslie Adames, director of Economic Analysis and Policy at ETI, emphasized that the significance of the quarter’s results lies not in the size of the increase but in its breadth. All six components moved in the same direction, signaling a generalized tightening in household finances. He noted that when borrowing costs remain high, unemployment rises and real income erodes, households inevitably face greater difficulty meeting their obligations. Although the index focuses on consumer loans and residential mortgages, Adames pointed out that recent data from the Federal Deposit Insurance Corporation also show rising delinquency in auto loans at commercial banks.
The firm described the second‑quarter increase as an early warning sign for lenders, retailers and policymakers. Consumers are still meeting their obligations, but with less flexibility, and the combination of high interest rates, rising delinquency and weakening real income suggests that household balance sheets may continue to tighten through the second half of the year.
The ETI‑FFI incorporates delinquency in consumer loans and residential mortgages, personal bankruptcy filings, unemployment, real income and average credit card interest rates. The index ranges from 0 to 100 and is divided into four fragility bands: low, moderate, high and extreme.
