Our Next Recession

Surely, I am not an economist. However, I do pay attention to news events, all while pairing them with millennial experiences.

The media is beginning to notice similar economic trends that the nation experienced before the 2008 housing bubble burst, triggering the 2008 Recession. This time, it may come by way of irresponsible sub-prime car loans. John Oliver dedicated a hefty portion of his HBO special to that very topic this past Sunday:

Many of the same reckless financial practices that killed our economy in 2008 are being repeated in the car dealing industry, and it doesn’t seem like Congress or state governments are in any hurry to stop it.

Closer to home, NJ.com issued what reads to be a dire warning to New Jersey law makers. Essentially, Standard and Poor’s rating agency cautioned that New Jersey could face immense economic turmoil if another recession was to occur, since the Garden State has been the among slowest in the nation to recover from the previous economic catastrophe.

What no media outlet seems to have considered is the chance for yet another collapse of the housing market. When it would happen, I cannot exactly say. But, consider the following:

Millennials, and the generations thereafter, are and will be entering the workforce with the largest sums of debt young adults have ever faced in the history of our nation. College tuition has placed graduates in debt on average of $35,000. I’m certain that we all know someone who is way deeper in debt…

Some American politicians, like Senator Elizabeth Warren and Senator Bernie Sanders, have been very vocal about the government treating students as cash-cows when lending federal student loans. The average interest rate of a federal student loan is 5%.

What Warren and Sanders, and all politicians for that matter, have not exactly made note of, are the interest rates for student loans from private lenders. Their interest rates go as high as 12%, causing some students to pay for double the amount of undergraduate education that they attended.

Adults are entering the work force in their early twenties, owing $35,000 as an average principle debt, and will likely pay roughly $75,000 total once their monthly payments and interest rates finally expire. Couple that with a national job market in which young people average $51,000 salaries after college, before taxes of course.

Sure, millennials are renting up a storm in apartment buildings, because we are young and truthfully don’t know when we can safely leave the nest; But we gotta get out. And one thing is certain; we already know we can’t afford to be buying homes any time soon.

At some point, millennials will likely be forced into buying homes due to expanding families, and ever-rising rent.

The next housing bubble will burst when millennials start to default on their student loans, and then of course, their mortgages. Unless, hopefully, our next President and Congress take these economic stress tests and foresights seriously, and work on proactive remedies.

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