In this light, the recent increase in borrowing among younger individuals is consistent with an improvement in labor market prospects and some loosening of credit standards, although the increase in borrowing by younger age cohorts is modest and remains below their pre-crisis level. The high level of student debt may create the risk of a drag on future consumption growth. In fact, while highly skilled young workers have traditionally provided a vital influx of new, affluent consumers to U.S. housing and auto markets, the unprecedented growth in student debt and the persistently high student loan delinquency rates are likely to dampen the influence of this group in today’s marketplace and may represent a structural or longlasting change in household credit markets. To summarize, I have reviewed the many positive signals we should take from the fact that in 2013 we observed the first year-over-year increase in borrowing by U.S. households since 2008. The willingness of U.S. households to increase their debt levels in aggregate likely reflects the restorative influences of significant turnarounds in house prices and stock market values since their lows in 2009–10, somewhat better employment outcomes, and much stronger household balance sheets as a result of write-offs and pay-downs of earlier indebtedness. In addition, a gradual loosening of credit availability is likely to have accommodated the increased demand for credit, although mortgage lending continues to be subject to high credit standards.
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