Is another recession coming, and will it eat millennials alive?

Recessions may be as difficult to accurately predict as the World Series champion in September, but some ominous signs have appeared.VISA and Mastercard credit card

Chief among these is a new Wallet Hub report that shows a disturbing increase in credit card debt nationwide. Americans are whipping out their cards in record fashion, and because so few of them are defaulting on their debt (only 3.13 percent of borrowers), bankers are eager to extend as much easy credit as possible.

The debt footprint, if you will, is eerily similar to that of 2007, right before the Great Recession began. In the second quarter of 2016, Americans piled on a combined $34.4 billion in new credit card debt, Wallet Hub reports. In the second quarter of 2007, the total was $31.1 billion.

Total credit card debt today is $912 billion. In 2007 it was $898 billion. Researchers predict the total will exceed $1 trillion later this year, which would “push the average amount owed by indebted households to a perilous $8,500.”

I know, dire predictions have been a regular staple of social media and the Internet since the last recession began. They amount to little more than click bait. But the good times, as anemic as they are, won’t last forever. That’s one truism you can take to the bank.

Nearly eight years have passed since the end of the Great Recession. When the next contraction comes, those holding a lot of unsecured debt could be hurt badly.

A lot of them are millennials.

A recent 24/7 Wall Street blog by Ted Beck, president and CEO of the National Endowment for Financial Education, said, “millennials are swimming in debt.” Student loans are a main culprit, but Beck pointed to studies that show 73 percent of young people do risky things, such as max out their cards or borrow from payday lenders.

He referenced another study that found 36 percent of them couldn’t raise $2,000 in a month for a financial crisis if they had to, and 20 percent have borrowed against retirement funds or made withdrawals over the last 12 months.

Beck urged the presidential candidates to begin talking about financial education. It may be too late for that.

If 2008 didn’t teach adults some pretty tough lessons about how to avoid debt, it’s hard to believe any amount of lecturing will help. It’s up to the adults to pass lessons on to their children, and apparently a lot of them didn’t do this with millennials.

Meanwhile, we can only speculate as to what Washington would do during another serious economic downturn, given the political fallout from the bailouts of ’08-09 and the current mood against banks and the wealthy.

Categories: Utah issues, Washington

About the Author

Jay Evensen

Jay Evensen is the Senior Editorial Columnist for the Deseret News. He has 32 years of journalism experience covering politics and a variety of other assignments at news organizations ranging from United Press International in New York City to the Las Vegas Review-Journal and the Deseret News, where he has worked since 1986. During that time, he has won numerous local, regional and national awards. Most recently, he was given the Cameron Duncan Media Award, given annually in Washington, D.C., by the advocacy group RESULTS, to the journalist judged to have done the most to further the cause of the world's poorest people.

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