Consumption, Credit, and the Missing Young Consumption, Credit, and the Missing Young

By Daniel H. Cooper, Olga Gorbachev, and María J. Luengo-Prado

The Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009 includes provisions that limit the availability of credit cards to young adults. Though the act is intended to protect members of this group, it has likely adversely impacted their ability to access credit and build a credit history. Using data from the New York Fed Consumer Credit Panel (CCP) provided by Equifax, the authors of this paper document that a higher percentage of young adults were missing from credit bureau records following the implementation of the CARD Act, and that their numbers had only partially recovered by 2018. The authors call this phenomenon the “missing young.” By combining state-level consumption data from the Bureau of Economic Analysis (BEA) with their measures of missing young (MY) from the CCP, they demonstrate that indicators of MY have predictive power for consumption growth at the state level.

The authors also present evidence that is consistent with the spending effects being driven at least in part by reduced credit supply to young individuals and not simply by reduced credit demand from this group.

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