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.
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