When it comes to lending it’s about young people, stupid

by. Henry Meier

Just as James Carville encapsulated the theme of Bill Clinton’s 1992 campaign by reminding people “it’s all about the economy, stupid,” an increasingly strong case can be made that your present and future lending growth is increasingly dependent on how you attract and manage young people.

The headlines in today’s paper proclaim the news that consumer borrowing, as measured by the New York Federal Reserve, shot up to its highest level since 2007.  Given the fact that consumer spending drives about two-thirds of our nation’s economic growth, this is good news even if an excessive reliance on debt is what got us into the mess in the first place.

But look a little further behind these results and the lessons become murkier and a little disturbing, as pointed out in an excellent blog post (see below) analyzing the latest numbers on the New York Fed’s Liberty Street Blog .  Specifically, people are doubling down on higher education as a means of securing their future and how these educational investments are managed will say a lot about economic growth in the coming years.

As the post points out, there’s been a tremendous amount of attention given to the growth of student loans in recent years, and looking at these numbers indicate why “first, student loans grew the most of any debt product in both periods (in percentage terms). Second, the growth in educational debt, like that of auto loans, is concentrated among the lower and middle credit score groups.”

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