How will the impact of student debt vary among consumers and how are companies preparing for that new reality? According to the article, what are some of the other financial pressures that are affecting consumers right now? What will be the effect on companies that rely on consumer discretionary spendin and how may this affect their pricing?
How will the impact of student debt vary among consumers and how are companies preparing for that new reality? According to the article, what are some of the other financial pressures that are affecting consumers right now? What will be the effect on companies that rely on consumer discretionary spendin and how may this affect their pricing?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:How will the impact of student debt vary among consumers and how are
companies preparing for that new reality?
According to the article, what are some of the other financial pressures that are
affecting consumers right now?
What will be the effect on companies that rely on consumer discretionary spending
and how may this affect their pricing?
Transcribed Image Text:Student Loan Borrowers Face Repayment Soon. CFOs Are Watching to See if
Spending Takes a Hit.
Summary: Consumer spending has been a talking point for why the economy is
healthy over the last couple of months, but as the summer spending spree comes
to an end and the impending repayment date of October 1st gets closer, many
worry about how this will change the consumer. On October 1st, the three hiatus of
having to pay student loan debt will come to an end. We know that summer
spending has been strong, which also coincides with balances and higher interest
rates on credit cards. The expense of student loan repayment, coupled with higher
gas prices, continued higher grocery bills, and higher debt service for their credit
cards could cripple the consumer. Considering our economy is based on 67% retail
sales, our summer of spending on credit cards and resuming student debt
repayment could be potentially problematic.
Expert Solution
Step 1: Define consumer spending
Consumer spending is the aggregate money spent on final products and services by individuals and households for personal use and enjoyment in an economy. Contemporary measures of consumer spending include all private purchases of durable products, nondurable products, and services.
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