Consumer Debt Rises for Young Adults

Consumer Debt Rises for Young Adults

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Consumer Debt Is on the Rise. Total debt is on the rise for the U.S., according to the latest issue of the Quarterly Debt Monitor. Don Schlagenhauf, chief economist for the St. Louis Fed’s Center for Household Financial Stability, and Lowell Ricketts, the center’s senior analyst, reported that total real consumer debt increased 2.1 percent on.

In the year 2000, over half of the households in America had credit card debt. By contrast, in 2001, that figure fell to 38% – over 12 percentage points lower. Over this time, average credit card debt rose from $5,048 to $7,697. This means the average american today holds 52% more debt today than they did a decade ago.

Young adults who attend college are practically forced to accrue debt, but lack the means to pay it off in a reasonable timeframe, or even at all. Consequently, repaying these loans can take decades.

An analysis of the most recent Survey of Consumer Finances finds that households headed by a young, college-educated adult without any student debt obligations have about seven times the typical net worth ($64,700) of households headed by a young, college-educated adult with student debt ($8,700).

With a median income of only around $34,000, the 71% of young adults with student debt often struggle to make these payments. Compounding this challenge are high levels of youth unemployment at 9.2%, as of January 2018 according to the Bureau of Labor Statistics.

Across age groups, the amount of debt steadily rises as people get older until it reaches a peak for individuals between the ages of 35 and 54, but it starts to decline after that.

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Everyone has that one relative who was an adult during the Great Depression and hid boxes of cash all over the house because they didn’t trust banks. A growing number of young people have exactly zero credit cards. There are a few reasons for this, and the recession is only one of them.

This is the inaugural edition of the full Quarterly Debt Monitor, a detailed report on consumer debt nationally compared to the four largest metropolitan statistical areas (MSAs) in the Eighth Federal Reserve District, which has headquarters in St. Louis.1 Each quarter-for this issue, the first.

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