Edward Conard

Top Ten New York Times Bestselling Author

  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
  • “…a very valuable contribution.” - Larry Summers, former Secretary of the Treasury and director of the National Economic Council, president emeritus, Harvard University
  • “Unintended Consequences is far smarter and more thought-provoking than most economics written for the general public” - Greg Mankiw, Harvard University, Former Chairman of the Council of Economic Advisors
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences is full of substance, it is one of the must-read books of the year, and once I finish it I will be giving it a second read through right away.” - Tyler Cowen, Professor, George Mason University
  • “A full-throated defense of economic dynamism.” - The Wall Street Journal
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…reminds us that inequality sends a signal of what society lacks most, in America’s case, entrepreneurship and risk taking.” - Lawrence Lindsey, CEO, The Lindsey Group, former Director of the National Economic Council
  • “Unintended Consequences offers deep and well-argued analyses on almost every issue.” - The New York Times
Upside of Inequality Oxford Unintended Consequences

AI Summary. Payments to the US Department of Education, mostly student loans, returned to their pre-pandemic pace of more than $75bn annualized from lows under $13bn, as required payments resumed on $1.5tn of federal student debt. Real retail spending by 25-34 year olds fell 1.5% while rising 2.5%-4.2% for all other age groups.

Joseph Politano Apricitas Economics
Date Posted:

The resumption of student loan payments has coincided with a 1.5% drop in real retail spending for 25-34-year-olds, vs. growth of 2.5-4.2% for other age groups. @JosephPolitano.

Do resumed student loan payments reduce spending by young households?

Core argument: Real retail spending by Americans aged 25–34 has fallen 1.5% since the start of September, while spending rose 2.5%–4.2% for all other age groups as student loan payments resumed.

This October, for the first time in more than 3 years, Americans were once again required to make payments on their $1.5T of outstanding Federal student debt. Starting in August, payments to the US Department of Education, most of which represent student loans, surged back to about their pre-pandemic rate of more than $75B annualized, up from the extreme lows of less than $13B annualized seen just months prior. Perhaps most importantly for the broader economy, America’s youngest households have made a substantial cutback in their consumption as student loan payments resume. Since the start of September, real retail spending by those 25-34 years old has fallen by 1.5% at the same time it has risen by between 2.5%-4.2% for all other age groups. However, this recent effect was concentrated among the young with the broader population of all former college attendees regardless of age not seeing a commensurate decrease in spending.

Takeaways by Macro Roundup® AI

  1. Real retail spending by Americans aged 25–34 has fallen 1.5% since the start of September, while spending rose 2.5%–4.2% for all other age groups as student loan payments resumed.
  2. Payments to the US Department of Education, most of which represent student loans, rebounded starting in August to roughly their pre-pandemic pace of more than $75bn annualized, up from under $13bn annualized months earlier.
  3. Americans resumed required payments on $1.5tn of outstanding federal student debt in October for the first time in more than 3 years, and the spending pullback was concentrated among the young rather than among all former college attendees.

Related Articles:

  • Debt Moratoria: Evidence from Student Loan Forbearance — The authors estimate that borrowers whose student loan payments were frozen ended with about $1,500 more in student loan balances and $1,200 (3%) more in other household debt, including mortgage, auto, and credit card borrowing, than borrowers without a payment stoppage. The findings suggest the pause raised short-term consumption and overall leverage, with effects concentrated among borrowers never previously delinquent.
  • The Economic Impact of the Student Loan Restart — 46m Americans owe student loan debt to the Department of Education, with three-quarters owing less than $40k and half owing under $20k. Borrowers with balances above $60k make up 16% of borrowers but hold the majority of outstanding student loan debt.
  • Credit Card Delinquencies Continue to Rise—Who Is Missing Payments? — Delinquency rates have risen from historic lows across most credit products, with auto loan and credit card delinquencies exceeding pre-pandemic levels while mortgage transitions into delinquency remain below them. The increase is broad-based across income groups and regions but disproportionately driven by Millennials, borrowers with auto or student loans, and those with relatively higher credit card balances.
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