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Chart(s) Of The Day: The Student Loan Debt Apocalypse

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    December 7, 2012

    In response to Deflationary Trends in Consumer Credit, reader John, owner of 37 Fast Food restaurants writes …

     Hi Mish

    I wrote last month regarding Obamacare and how it’s influencing the unemployment rate.

    Now that Obamacare is more firmly entrenched and the look back period has officially started, I see a lot of my fellow restaurant owners moving fast to hire part-time workers only. Keep your eye on the part-time increases in employment over the next year.

    On another note, it would be interesting to see how student loan balances have gone up since 2004 compared to auto loans, credit cards and mortgages for the same time period.


    Impact of Obamacare on Jobs

    Please see Mish Obamacare Mailbag: Expect More Part-Time Jobs and how it’s influencing the unemployment rate] for a collection of reader emails, including one from John, regarding the impact of Obamacare on jobs.

    Impact of Recession on Consumer Debt

    John’s idea on charting student loan balances is an interesting one.

    Doug Short at Advisor Perspectives does a phenomenal job with charts and Doug was kind enough to chart the comparison of various consumer debt ratios two ways, per my request.

    Household Debt Since 2003

    click on either chart for sharper image

    Household Debt Since Start of 2007 Recession

    Fed data for the above charts is quarterly.

    As you can clearly see: mortgage debt, home equity debt, auto loans, credit cards, and other miscellaneous debt is all down since the start of the recession.

    Overall consumer debt is down 8.6% but student loans are up 74.6%. This is what happens when government purportedly attempts to find solutions to problems.

    The result is education costs have increased unabated, and millions of students have been turned into debt-slaves for life in a game of Student Debt Lotto.

    The deleveraging of consumer debt is by definition deflationary, as is turning students into debt slaves.

    Mike “Mish” Shedlock



    Images: Flickr (licence attribution)

    About The Author

    Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.  Visit Sitka Pacific’s Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

    You are currently viewing my global economics blog which typically has commentary every day of the week. I am also a contributing “professor” on Minyanville, a community site focused on economic and financial education.  Every Thursday I do a podcast on HoweStreet and on an ad hoc basis contribute to many other sites.

    When not writing about stocks or the economy I spend a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com.