Mish's Global Economic Trend Analysis

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Trends in College Tuition vs. Bachelor’s Degree Wages; Interesting Demographics of Student Loan Debt History Posted: 02 Dec 2012 09:48 PM PST According to the New York Fed, Student loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. Moreover, student loans balances have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages. The Fed has some interesting charts on Student Loan Debt History through first quarter of 2012. Debt levels are higher now, with student debt at $956 billion through third quarter. What caught my eye however, is skyrocketing debt in the age group 30-39. First Quarter Overall Debt Student Debt Under Age 30 Student Debt Age 30-39 Even if it took someone age 18, eight to ten years to finish college, they would still be 28 years old at most when they finished their education. Yet, student debt in the 30-39 demographic group now exceeds that of the under 30 age group. Moreover, the under age 30 group accounts for less than a third of the overall student debt. Points to Consider Over-two thirds of student debt is held by those well outside the normal student demographic! This trend is not entirely recession-related given that it has been steady since 2005. Someone exiting military service would be covered for 36 months of in-state education by the GI Bill. Someone working for a major employer for any significant length of time would likely have some or all education expenses paid for by the company.  Those aged 30-39 would be far more likely to have steady income than someone 18-24, thereby avoiding the need to rack up as much debt. Have a Story to Share? If you are 30 years or older, sitting on a pile of student debt, and are willing to tell your story how and why that happened, Please Email Mish. If I get any interesting letters, I may share some of the stories. Trends in College Tuition vs. Bachelor's Degree Wages Meanwhile, as student debt piles up, wage growth for college grads certainly doesn't. Please consider a Shocking Chart on Tuition vs. Earnings for College Grads on The Fiscal Times. Student debt levels have reached a new high – rising $42 billion in the last quarter to $956 billion, according to a report this week from the New York Fed. At the same time, tuition rates have seen a staggering 72 percent increase since 2000. As if those two upward trends weren't hitting students hard enough – the average earnings for full-time workers ages 25-34 with Bachelor's degrees has also dropped 14.7 percent since 2000. The chart below from Citi shows the striking contrast: Howard Dvorkin, author of Credit Hell, told The Fiscal Times last month: "It's hard to predict when the student loan meltdown could occur, but if the bubble explodes, the consequences will be devastating for the economy." Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More Mike "Mish" Shedlock 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 http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

US Fiscal Cliff Blame Game Between Geithner, Boehner; UK Deficit Cut Taking Longer Than Planned Posted: 02 Dec 2012 09:27 AM PST Agreement that something needs to be done with soaring deficits is easy to find, in the US and abroad. Actually doing something reasonable about huge deficits has proven impossible to date. Fiscal Deficit Blame Game Bloomberg reports Geithner Joins Boehner in Trading Blame Over Fiscal Cliff Talks. U.S. Treasury Secretary Timothy F. Geithner and House Speaker John Boehner hardened their positions over the fiscal cliff, each blaming the other for a standoff that could lead to more than $600 billion in tax increases and spending cuts in January. "There's not going to be an agreement without rates going up," Geithner said in a taped interview that aired today on CNN's "State of the Union." Republicans will "own the responsibility for the damage" if they "force higher rates on virtually all Americans because they're unwilling to let tax rates go up on 2 percent of Americans." Republican Boehner said the White House is wasting time. "I would say we're nowhere, period," Boehner said on the "Fox News Sunday" program. "We've put a serious offer on the table by putting revenues up there to try to get this question resolved. But the White House has responded with virtually nothing." There's "clearly a chance" that there won't be an agreement in time to avert the fiscal cliff, Boehner said on the Fox program. "Just the threat of the fiscal cliff is already hurting the economy." Geithner appeared on five talk shows today. In the interviews, taped Nov. 30, he challenged Republicans to make a counteroffer to the Obama administration's framework plan. Republican Ball Gene Sperling, Obama's top economic adviser, challenged Republican congressional leaders to put an offer on the table. "It's for them now to come forward with their plan, with their details, so that we can start working quickly to getting an agreement," said Sperling, director of the White House National Economic Council, on "Political Capital with Al Hunt," airing this weekend. "The ball really is with them now," said Geithner, the administration's lead negotiator on the fiscal cliff, on CNN. "They're having a tough time trying to figure out what they can do, what they can get support from their members for." One good thing is happening in January. Tim Geithner is stepping down as US Treasury Secretary. UK Deficit Cut Taking Longer Than Planned The BBC reports Deficit cut is taking longer than planned Chancellor George Osborne has admitted that curbing the UK's financial deficit is "taking longer" than planned. But he told the BBC the government was "making progress" and that to "turn back now would be a complete disaster". Mr Osborne, who delivers his Autumn Statement on Wednesday, said well-off people would "pay their fair share". "The deficit is down by a quarter. There are a million more jobs in the private sector and to turn back now, to go back to the borrowing and the debt and the spending that Ed Balls represents would be a complete disaster for our country." He added that some people were calling for more borrowing and others for more spending cuts, but the government had "got the right plan and we should stick to that plan". As you can see, political bickering over needed budget cuts is rampant on both sides of the Atlantic. It's important to maintain a global focus instead of looking at US problems in isolation. There is not a good fiat currency anywhere (and there cannot be by definition actually). Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock 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 http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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