Sure, recessions have picked up a well-deserved bad rap. However, despite all the badness they bring, the truth is that they do indeed do some good. They reduce interest rates. They lower prices. And they remind us all just how precarious our lots in life are perched.
Our 2008 recession sure was a doozy, wasn’t it? It was such a kick to our collective crotch that the average under-35-year-old American of today has much less debt than one did before the 2008 collapse. One of the main reasons this is so is that those under 35 nowadays are postponing the purchasing of big-ticket items such as cars and houses. Close to 75 percent of young Americans had a car in 2007, according to a recent Pew report. In four years, that figure dropped to around 66 percent.
Talking about this trend, Richard Fry, a Pew senior economist, said, “We know they’re going to school more, so that puts them into the job market later, and they’re postponing marriage and having kids later. So if you marrying and having kids later, the urgency to buy a home and get a mortgage is also delayed as well.”
Of course, part of the reason may be credit-related, as the recession made it more dfficult to finance a car with no credit history. But, no matter the reason, this keeps younger consumers’ debt to income ratios lower. That lack of debt is not only good for the souls of the young, but also for the heartbeat of the American economy since 70% of it is driven by consumer spending.