Younger Americans Spurring Economic Growth

July 11, 2016 at 9:22 am Leave a comment

wsjAs I scoured this morning’s clips for news you could use to start your credit union day I settled on an article that reminded me of one of my favorite movie quotes courtesy of Prince   Faisal: “virtues of war are the virtues of young men – courage and hope for the future. Then old men make the peace, and the vices of peace are the vices of old men – mistrust and caution.”

A bit overstated for a credit union blog? You bet but an analysis in this morning’s WSJ  pinpoints yet another reason why the economy continues to underwhelm even as the jobs market continues to grow:  Young people are a heck of a lot more optimistic about the economy than Baby Boomers.  According to the WSJ: Americans 55 of years of age and older have  pulled back on their spending over the last year while younger Americans have been spending more. As a result  “All the growth is being driven by young people, and in fact the older people are dragging down growth,”

According to the paper, this divide, “helps explain why consumer spending decelerated in 2015 and early this year despite low-interest rates, cheap gasoline and falling unemployment.”

It seems to me that this is yet another great reason why your credit union should be trying extra hard to attract younger people into the fold.

Remember that about 70% of the economy is driven by consumer spending so a growing divide in economic perception could have a big impact on the economy. It’s great that not everyone is hording their cash  but these  young optimists   simply don’t have the spending that the Baby Boomers do.  Millennials are carrying record amounts of student debt,  for example  and this might be one reason why they are holding off from buying that first house.

Is it Time to Make More Private Student Loans?

Since we are on the subject of debt and young people, did you know that n the first quarter of this year the percentage of private student loans that were at least 30 days past due dropped  to its lowest level since the Great Recession  but that,  lending growth  remains flat according to the American Banker? Here is another factoid: Lenders have learned some lessons and are taking more precautions.  During the 2015-2016 academic year, 89.7% of private student loans were co-signed, usually by a family member. During the 2008-2009 school year, only 74.6% of private student loans were co-signed.

Entry filed under: Economy, General. Tags: .

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Authored By:

Henry Meier, Esq., General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association.

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