It seems that the young have grown as cautious as the elderly
with
debt:
Young adults are cutting debt faster than older people
and are less in hock to creditors than a decade ago–despite
the ballooning of student loans, a new study shows.
Between 2001 and 2010, young households—defined as those
headed by someone younger than 35—have generally reduced their
indebtedness while older households have increased it, according to
a report by
the Pew Research Center released
Thursday. Some 56% of young households saw either a decline or
stabilization in their overall debt load in the period, with only
one type of debt—student loans—rising as a share of total debt. By
contrast, older households tended to have more non-property-related
debt than before, not less.
Neil Shah at The Wall Street Journal explains that this
is due to a variety of factors, including reduced overall
mortgages, auto loans, and credit card debt.
Specifically, younger people are getting married later, which
means they do not form households until they are older.
As for automobiles, only 66% of young households owned cars in
2011.
The post compares the present day to the 1980s, when younger
households held more debt than older ones:
The typical young-adult household owed around $15,000 in 2010,
half the $30,000 owed by older households. That’s a striking
reversal from 1983, when young households owed more than older
counterparts.
Of course, the 1980s saw
roaring growth of real consumption and GDP per person,
producing such categories as the “yuppie,” the Young Urban
Professional.
While I think it is responsible for the United States to reduce
its overall debt load, I grow concerned about future income growth
for young households.
Let us hope that this does not mean a general adversity to risk
for those under 35. It is they who must help reform our government
in the future; they certainly have a hardy task ahead.
