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The Federal Reserve Introduced A New Publication For And About Consumers

The Federal Reserve Board (FRB) has introduced a new publication titled, "Consumer & Community Context." According to the FRB announcement, the new publication will feature:

"... original analyses about the financial conditions and experiences of consumers and communities, including traditionally under-served and economically vulnerable households and neighborhoods. The goal of the series is to increase public understanding of the financial conditions and concerns of consumers and communities... The inaugural issue covers the theme of student loans, and includes articles on the effect that rising student loan debt levels may have on home ownership rates among young adults; and the relationship between the amount of student loan debt and individuals' decisions to live in rural or urban areas."

Authors are employees of the FRB or the Federal Reserve System (FRS). As the central bank of the United States, the FRS performs five general functions to "promote the effective operation of the U.S. economy and, more generally, the public interest:" i) conducts the nation’s monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates; ii) promotes the stability of the financial system and seeks to minimize and contain systemic risks; iii) promotes the safety and soundness of individual financial institutions; iv) fosters payment and settlement system safety and efficiency through services to the banking industry; and v) promotes consumer protection and community development through consumer-focused supervision, examination, and monitoring of the financial system. Learn more about the Federal Reserve.

The first issue of Consumer & Community Context is available, in Adobe PDF format, at the FRB site. Economists, bank executives, consumer advocates, researchers, teachers, and policy makers may be particularly interested. To better understand the publication's content, below is an excerpt.

In their analysis of student loan debt and home ownership among young adults, the researchers found:

"... home ownership rate in the United States fell approximately 4 percentage points in the wake of the financial crisis, from a peak of 69 percent in 2005 to 65 percent in 2014. The decline in home ownership was even more pronounced among young adults. Whereas 45 percent of household heads ages 24 to 32 in 2005 owned their own home, just 36 percent did in 2014 — a marked 9 percentage point drop... We found that a $1,000 increase in student loan debt (accumulated during the prime college-going years and measured in 2014 dollars) causes a 1 to 2 percentage point drop in the home ownership rate for student loan borrowers during their late 20s and early 30s... higher student loan debt early in life leads to a lower credit score later in life, all else equal. We also find that, all else equal, increased student loan debt causes borrowers to be more likely to default on their student loan debt, which has a major adverse effect on their credit scores, thereby impacting their ability to qualify for a mortgage..."

The FRB announcement described the publication schedule as, "periodically." Perhaps, this is due to the partial government shutdown. Hopefully, in the near future the FRB will commit to a more regular publication schedule.

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