The State of Young Adults Balance Sheets: Evidence from the Survey - - PowerPoint PPT Presentation
The State of Young Adults Balance Sheets: Evidence from the Survey of Consumer Finances Lisa Dettling and Joanne Hsu Federal Reserve Board May 8, 2014 The analysis and conclusions set forth are those of the authors and do not indicate
Federal Reserve Board
The analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the Board of Governors.
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 1 / 12
◮ Net worth, asset holdings, debts, credit market experiences
◮ Are young adults doing better or worse than their
◮ Have young adults fared better or worse than older adults
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 2 / 12
◮ Comprehensive picture of wealth and income for American
◮ The gold standard for research on household balance sheets
◮ Use 34-54 year olds as a comparison ◮ Compare millenials (18-31 in 2000s) to Gen X (18-31 in 1989) Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 3 / 12
10 20 30 40 50 Total net worth, $1,000s 2001 2004 2007 2010 1989 Year Median 75th percentile 25th percentile
SCF 1989−2010, age 18−31, values in 2010 dollars
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 4 / 12
.05 .1 .15 .2 Ratio of middle to young adult net worth 2001 2004 2007 2010 1989 Year
SCF 1989−2010. Young adults: age 18−31, middle adults 35−50
Median Middle Adult Net Worth
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 5 / 12
50 100 150 Total assets, $1,000s 2001 2004 2007 2010 1989 Year Median assets P25 assets P75 assets
SCF 1989, 2001−2010, age 18−31, values in 2010 dollars
Distribution of Assets of Young Adults
20 40 60 Total debt, $1,000s 2001 2004 2007 2010 1989 Year Median debt P25 debt P75 debt
SCF 1989, 2001−2010, age 18−31, values in 2010 dollars
Distribution of Debt of Young Adults Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 6 / 12
1 2 3 Bank deposits $1,000s .1 .2 .3 .4 .5 .6 .7 .8 .9 1 Proportion holding bank deposits 2001 2004 2007 2010 1989 Year Proportion holding
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Bank Deposits
30 60 90 120 150 House value, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion holding houses 2001 2004 2007 2010 1989 Year Proportion holding
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Homeownership
3 6 9 Ret accounts, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion holding ret accts 2001 2004 2007 2010 1989 Year Proportion holding
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Retirement Accounts
3 6 Stocks, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion holding stocks 2001 2004 2007 2010 1989 Year Proportion holding
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Stocks
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 7 / 12
.5 1 1.5 2 2.5 Credit card debt, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion owing credit card debt 2001 2004 2007 2010 1989 Year Proportion owing
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Credit Card Debt
30 60 90 120 150 Housing debt, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion owing housing debt 2001 2004 2007 2010 1989 Year Proportion owing
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Housing Debt
3 6 9 12 Vehicle debt, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion owing vehicle debt 2001 2004 2007 2010 1989 Year Proportion owing
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Vehicle Debt
3 6 9 12 Education debt, $1,000s .1 .2 .3 .4 .5 .6 .7 Proportion owing education debt 2001 2004 2007 2010 1989 Year Proportion owing
SCF 1989−2010, age 18−31, values in thousands of 2010 dollars
Young Adult Education Debt
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 8 / 12
.1 .2 .3 .4 Proportion don’t pay off credit cards in full 2001 2004 2007 2010 1989
Proportion of all respondents, not conditional on holding credit cards
Young Adults and Middle Adults
Not Paying Credit Cards in Full
Young adults 18−31 Middle adults 35−50 .05 .1 .15 Proportion with high PIR 2001 2004 2007 2010 1989
Payment to income ratios > 40 percent
Young Adults and Middle Adults
High Payment−to−Income Ratios
Young adults 18−31 Middle adults 35−50 .1 .2 .3 Proportion reporting late payments 2001 2004 2007 2010 1989 Young Adults and Middle Adults
Late Payments
Young adults 18−31 Middle adults 35−50 .05 .1 .15 Proportion reporting very late payments 2001 2004 2007 2010 1989 Young Adults and Middle Adults
Late on Payments by 2 months
Young adults 18−31 Middle adults 35−50
Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 9 / 12
◮ BUT not ideally suited for studying young adults ◮ Young adults living arrangements vary a lot: married,
◮ Need to scale by number of members to get individual-level
◮ Young adults living at home or with older roommates are
◮ Sample selection issues? Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 10 / 12
5000 10000 15000 20000 25000 30000 Median Income 2001 2004 2007 2010 Year SCF Wage Income CPS Wage Income
SCF versus CPS Median Wage Income
5000 10000 15000 Difference in Median Income 2001 2004 2007 2010 Year
Difference Between SCF and CPS Median Wage Income Dettling and Hsu (FRB) Young Adult Balance Sheets May 8, 2014 11 / 12
◮ Relative increases in net worth, declines in delinquency ◮ Need to wait for 2013 data to see if this trend has continued
◮ Dettling and Hsu (2014) use FRBNY CCP/Equifax panel to
◮ Find increases in delinquency, declining credit scores,
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