According to the New York Fed, total household debt increased by $35 billion in the second quarter to reach $12.3 trillion, only slightly below the peak of $12.7 trillion reached in 2008.

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These numbers may seem to suggest that household debt growth is on a troubling trajectory but has Capital Economics’ economist Andrew Hunter writes in his weekly US Economics research note, there’s no reason to panic about household debt levels just yet.

The US economy has recovered the majority of its financial crisis losses and more since 2010. Consumers have reaped the benefits from this recovery as average disposable incomes have climbed steadily. And as a proportion of higher disposable incomes, household debt is still below the level reported for 2008.

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As a share of disposable income, household debt is now 105%, down from a peak of more than 130% in 2008. What’s more, household debt servicing as a percentage of disposable income is now less than 10.5% below the peak of 13% reported for 2008. Put simply, household balance sheets are stronger and consumers appear better positioned to weather interest rate hikes than they were at the end of the last credit cycle.

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Nonetheless, there’s one area of the market that is flashing warning signs. Lending to sub-prime borrowers is on the rise once again and in particular areas of the market, defaults are increasing.

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New mortgage lending to those with the poorest credit scores is far lower now than it was in the mid-2000s, both in dollar terms and as a share of total lending, although sub-prime auto loan origination is extremely near the levels last seen in 2006. The current level of also loan debt equates to 790% of disposable income, only slightly below the ratio of 830% reported for 2006.

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UBS adds more color on the health of the US consumers’ balance sheet. According to a survey conducted by Matthew Mish and Stephen Caprio of the bank’s Evidence Lab research, a staggering 36% of all US consumers report having ‘strained’ finances (consumers are ‘strained’ if their monthly income barely covers or is below monthly expenses). Specifically, UBS’s survey shows that 69% of households with an annual income below $40,000 a year can be classified as stressed. 41% of households with an income of $40,000 a year to $99,000 are considered stressed and 26% of households with an income of over $100,000 a year also meet the stressed criteria. In total, these cohorts comprise about 44% of the US consumer population.

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Unfortunately, things only seem to be getting worse for the stressed US consumer. Since late 2014 about 30% of stressed consumers in the low-income bracket and 25% of the middle-income cohort have characterised their finances as getting worse sequentially, while about 50% to 55% have noticed little change.