Kathianne
08-07-2012, 10:54 AM
Usually 'more credit' is good news, means people are shopping and confident of repayment. However, when more than 1/3 the credit is student loans, not so good:
http://blogs.the-american-interest.com/wrm/2012/08/06/student-loans-weigh-down-recovery/
August 6, 2012 Student Loans Weigh Down Recovery Finally, we have some (arguably) good economic news: Americans’ credit levels have returned to their pre-recession peak of $2.58 trillion. This is usually a good sign for the economy. Higher credit means more consumers are shopping, more banks are lending, and confidence in general is up.
But as the Wall Street Journal points out (http://online.wsj.com/article/SB10000872396390443545504577567511417057188.html?m od=WSJ_WSJ_US_News_5), this news comes with a caveat, and it’s a big one.Sstudent loan debt accounts for nearly one-third of that figure and is now second only to mortgage debt as the leading form of debt held by Americans. This seriously undercuts the otherwise good economic news, as student loan debt provides a considerably smaller boost to the overall economy than other forms:
Shorter term, however, student loans don’t juice the economy in the same way as increases in credit-card debt. Exclude student debt from the Fed’s consumer-credit data and the total is actually down more than 15% from its 2008 peak.
Looked at that way, consumers aren’t really borrowing and spending as much as the headline consumer-credit figure would suggest, says Ken Safian of Safian Investment Research. This dovetails, he adds, with personal-income data showing that while incomes are going up, expenditures are flat.
But the short-term economic impact of student debt pales in comparison to its long-term effects on those who hold it. As we’ve said before (http://blogs.the-american-interest.com/wrm/2012/07/18/middle-aged-drowning-in-student-debt/), higher ed costs continue to be a major drag on the lives of young people, preventing them from taking important risks and delaying major life decisions. We need to make college more relevant and more affordable.
I know more and more people that are saying college is 'not for everyone,' but that if they had college bound student, that was unsure of what they wanted to do with a degree, they'd advise first getting an associate's degree and a trade. Electricians, roofers, plumbers are not going out of style anytime soon. All pay a good salary and offer an opportunity to start your own business.
Related, if the credit uptick was for retail and more confidence, wouldn't find these numbers:
http://www.gallup.com/poll/156452/Economic-Confidence-Slips-July-Second-Month-Row.aspx?version=print
August 7, 2012
Economic Confidence Slips in July, for Second Month in a Row Economic outlook falls to a new 2012 low by Jenny Marlar
WASHINGTON, D.C. -- Gallup's Economic Confidence Index averaged -26 in July, a decline from -22 in June, and close to the 2012 low of -27 measured in January. Economic confidence improved during the first five months of the year, but July marks the second monthly decline in a row. Still, the index remains significantly higher than the -42 from July of a year ago.
http://sas-origin.onstreammedia.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/tpa593-yceyc7g2v8y8nka.gif
Gallup's Economic Confidence Index consists of two measures -- one assessing current U.S. economic conditions and the other assessing the nation's economic outlook. Americans were more pessimistic about both current conditions and the economic outlook during July. Fourteen percent of Americans said the economy is excellent or good, while 42% considered it poor, resulting in a -28 current conditions rating. The -23 economic outlook rating reflects a five-percentage-point decline from June, with 36% of Americans saying the economy is getting better and 59% saying it is getting worse. This is the lowest economic outlook rating of 2012...
http://blogs.the-american-interest.com/wrm/2012/08/06/student-loans-weigh-down-recovery/
August 6, 2012 Student Loans Weigh Down Recovery Finally, we have some (arguably) good economic news: Americans’ credit levels have returned to their pre-recession peak of $2.58 trillion. This is usually a good sign for the economy. Higher credit means more consumers are shopping, more banks are lending, and confidence in general is up.
But as the Wall Street Journal points out (http://online.wsj.com/article/SB10000872396390443545504577567511417057188.html?m od=WSJ_WSJ_US_News_5), this news comes with a caveat, and it’s a big one.Sstudent loan debt accounts for nearly one-third of that figure and is now second only to mortgage debt as the leading form of debt held by Americans. This seriously undercuts the otherwise good economic news, as student loan debt provides a considerably smaller boost to the overall economy than other forms:
Shorter term, however, student loans don’t juice the economy in the same way as increases in credit-card debt. Exclude student debt from the Fed’s consumer-credit data and the total is actually down more than 15% from its 2008 peak.
Looked at that way, consumers aren’t really borrowing and spending as much as the headline consumer-credit figure would suggest, says Ken Safian of Safian Investment Research. This dovetails, he adds, with personal-income data showing that while incomes are going up, expenditures are flat.
But the short-term economic impact of student debt pales in comparison to its long-term effects on those who hold it. As we’ve said before (http://blogs.the-american-interest.com/wrm/2012/07/18/middle-aged-drowning-in-student-debt/), higher ed costs continue to be a major drag on the lives of young people, preventing them from taking important risks and delaying major life decisions. We need to make college more relevant and more affordable.
I know more and more people that are saying college is 'not for everyone,' but that if they had college bound student, that was unsure of what they wanted to do with a degree, they'd advise first getting an associate's degree and a trade. Electricians, roofers, plumbers are not going out of style anytime soon. All pay a good salary and offer an opportunity to start your own business.
Related, if the credit uptick was for retail and more confidence, wouldn't find these numbers:
http://www.gallup.com/poll/156452/Economic-Confidence-Slips-July-Second-Month-Row.aspx?version=print
August 7, 2012
Economic Confidence Slips in July, for Second Month in a Row Economic outlook falls to a new 2012 low by Jenny Marlar
WASHINGTON, D.C. -- Gallup's Economic Confidence Index averaged -26 in July, a decline from -22 in June, and close to the 2012 low of -27 measured in January. Economic confidence improved during the first five months of the year, but July marks the second monthly decline in a row. Still, the index remains significantly higher than the -42 from July of a year ago.
http://sas-origin.onstreammedia.com/origin/gallupinc/GallupSpaces/Production/Cms/POLL/tpa593-yceyc7g2v8y8nka.gif
Gallup's Economic Confidence Index consists of two measures -- one assessing current U.S. economic conditions and the other assessing the nation's economic outlook. Americans were more pessimistic about both current conditions and the economic outlook during July. Fourteen percent of Americans said the economy is excellent or good, while 42% considered it poor, resulting in a -28 current conditions rating. The -23 economic outlook rating reflects a five-percentage-point decline from June, with 36% of Americans saying the economy is getting better and 59% saying it is getting worse. This is the lowest economic outlook rating of 2012...