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The only thing that really surprises me is that they are finally talking about it.

 

There's an $80 billion 'elephant in the room' that could be worse than a recession for Wal-Mart, Home Depot and Costco

 

Aug 23rd 2016 2:41PM

 

America's largest retailers are facing a threat that is rarely discussed student loan debt.

 

Consumers make $80 billion in loan payments a year, Moody's retail analyst Charlie O'Shea said on Bloomberg TV. This means they have less money to spend at retailers like Walmart, Home Depot, and Costco.

 

"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" O'Shea told Bloomberg.

 

He says that America's more than $1.3 trillion in student loans could hurt the American economy more than a recession because it will last for decades to come.

 

Industry website Retail Dive notes that younger people are more burdened by student loan debt, meaning that they are frugal during what should be their highest-spending years.

 

"It's slated to get worse as retailers find that millennials in their thirties are hampered by debt in what should be their highest-spending years," writes Daphne Howland at RetailDive.com.

 

Student debt could be part of the reason sales are contracting at department store retailers like Macy's, Sears, Nordstrom, and Kohl's. O'Shea told Bloomberg that off-price retailers like TJ Maxx are thriving because consumers have less money to spend on clothing.

 

Macy's same-store sales fell 7.4% in the most recent quarter, Nordstrom's fell 1.7%, and Kohl's dropped 3.9%. Shares of Macy's and Nordstrom have lost about 50% of their value in the last year, and Kohl's stock price has fallen 40%, notes Business Insider's Hayley Peterson.

 

Shopping visits made to off-price retail stores increased by 4% in the 12 months ending April 2016, compared to the same period last year.

 

http://www.aol.com/article/2016/08/23/theres-an-80-billion-elephant-in-the-room-that-could-be-wors/21457425/

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Since we are all family here I'm about to show my ignorance...again but if there is a serious recession bordering on a depression, will prices go down or will they go up? I can make an argument in my mind for both sides but I'm not sure which one is valid.

 

1). If the public isn't buying merchandise will the stores have to raise prices to make up the difference to stay in business?

 

OR

 

2). Will stores lower the prices to get people in the door to make sales?

 

In other words if someone needed to make major purchases (appliances) would it be better to buy them before or during a recession?

 

I'm assuming that after a recession people will be more confident about buying and hopefully have a little more money so prices will go up then. Not the best time to buy. I think.

 

I'm very thankful D-ex didn't come out of school with any student loans. We were very fortunate that he had 5 years of the military G.I. Bill and a couple of small scholarships. He also worked his butt off in the summer. I was also working as soon as son started school. And yes, we lived hand to mouth. Family helped us with groceries pretty often too. But we knew where every dime and nickel went because we had to. I can't do it, but D-ex is setting up a college fund for Sweet Baby J so hopefully he won't have to struggle through paying student loans. Who knows what the future will hold by then. Maybe a trade certificate will be more valuable than a college degree?

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Deflation is a reduction in the amount of money in circulation typically causing depression and falling prices. A depression is a correction period following an inflation (an increase in the amount of money in circulation causing money to lose it's value and so prices rise).

 

Really great book if you want plain easy to understand economics "Whatever Happened to Penny Candy" by Richard Mayberry https://www.amazon.com/Whatever-Happened-Explanation-Economics-Investments/dp/0942617649/ref=sr_1_1?ie=UTF8&qid=1472017888&sr=8-1&keywords=whatever+happened+to+penny+candy

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Who knows what the future will hold by then. Maybe a trade certificate will be more valuable than a college degree?

 

 

This is the new trend....cuz SOMETHING has to correct the inflated costs of higher education. And the higher and higher costs of borrowing money for that education.

 

A lot of creativity has been put to work in recent years. How to get adults thru higher schooling without a 4 year full-time commitment. A lot of OTHER certificates have been created that is taking away the assumption that BA, MA, MBA, PhD are the only things that will bring you and yours into THE GOOD LIFE.

 

The reality is....those degrees can put you into indebtedness for life. Not in every case but certainly more and more are finding the fallacy in the original assumptions.

 

MtRider .....TPTB change the rules for money/wealth/investing/etc so often, we can't even get thru a generation before the 'playing field' has changed again! <_<

Edited by Mt_Rider
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