Jan 3, 2020

The generational confidence gap

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Data: The Conference Board, DB Global Research; Chart: Axios Visuals

November's consumer confidence report showed the largest gap between the confidence of consumers under 35 and those over 55 in the history of the Conference Board's report.

The state of play: Younger people have typically had higher confidence scores, but that has changed in recent years, the data show.

  • The chart above shows the result of subtracting the monthly confidence score of respondents over 55 from those under 35.

What's happening: That's largely because older Americans have benefited much more from the current low interest-rate environment and gains from the stock market, Nela Richardson, investment strategist at Edward Jones, tells Axios.

  • "People at different ages are experiencing the economy differently," she says.
  • "If you’re under 35 you’re looking more likely at student loan debt and really high home prices, even if interest rates are low. If you’re older, you’re probably not as affected by student loan debt, and you’re probably not negatively affected by high home prices, though you might have a huge gain from home equity."

The bottom line: Richardson also points out that younger people are less willing to take on risk assets like equities and have missed out on much of the bull market, in part because of their albatross of student debt.

  • "Whereas every other form of debt — from credit cards to mortgages — actually have this wealth effect that makes you want to invest more and be part of the economy, student loan debt makes young people more risk averse, and it makes them more risk averse precisely at the time you should be taking on more risk assets."

Of note: December's consumer confidence report showed the gap between older and younger people shrinking and younger people growing more confident, but the difference remains below the historical average.

Go deeper: The consumer confidence gap shrank in November

Go deeper

FICO score changes could hurt Americans already facing debt issues

Illustration: Aïda Amer/Axios

The creator of FICO credit scores is enacting changes in how it rates consumers' debt levels and their speed of repayment, the Wall Street Journal reports.

Why it matters: The decision, which impacts the most widely used credit score in the U.S., could lower the scores of those who fall behind on loan payments, sign up for personal loans or have rising debt levels, likely making it harder for many Americans to get approvals for loans.

Go deeperArrowJan 23, 2020

The world's fast-growing mountain of debt

The world's total debt surged by some $9 trillion in the first three quarters of 2019, according to data from the Institute of International Finance, bringing the world's total debt load to $253 trillion, or 322% of its GDP — a record high.

Why it matters: In times of economic strength, economists exhort countries to pare back their debt burdens and pay it down to protect against future unrest and downturn.

Go deeperArrowJan 13, 2020

The present and future confidence gap

Data: The Conference Board; Chart: Axios Visuals

The difference between Americans' views of their current situation and their expectations for the future continues to grow.

The state of play: The Conference Board's December consumer confidence report showed a 3.4 point rise in consumers' assessment of their present situation, and a 3-point decline in their expectations for the future.

Go deeper: Consumers are picking up the lagging business sector's slack