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Moody's say US retail sales will suffer as student debt exceeds USD 1.3trln

US ratings agency out with a report this morning 22 Aug 2016

  • Ballooning student debt is set to negatively affect US retail sales
  • the debt burden is also shifting toward the highest spending demographic, with 30- to 39-year-olds now holding the largest share of student loans outstanding.

Moody's retail analyst Charlie O'Shea says:

" Student debt in the US now exceeds $1.3 trillion, and that figure likely will keep growing for the foreseeable future.Our estimates indicate that reasonable amortization of this debt results in about $160 billion in annual payments, thus student loan obligations will have a definite negative impact on retail sales."

Moreover, student debt obligations are growing faster than income. The average salary per college graduate has increased by only about 3% in the past seven years, while the average student debt burden has increased by roughly 53% over the same period."

It's difficult to say exactly which segments of the retail sector will take the biggest hit as student debt takes an increasingly bigger bite from graduates' disposable income. "But it is safe to say that the only potential 'non-losers' are retailers that benefit from the 'trade-down' effect such as discounters, warehouse clubs and dollar stores."

More from Moody's here

One to keep an eye on giving Yellen & Co a bit more to think about.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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