After it was announced that student loan payments will resume on August 30, many retailers fear that this could cause a reduction in the budget of Americans and therefore a large drop in sales.
Large retail chains such as Target or Nordstrom anticipate that by this fall the resumption of payments on federal loans is a financial shock for the pocket of the average American that will reduce their expenses.
It is estimated that bills for some borrowers will be between $200 to $300 dollars, even higher than expected. According to a JPMorgan analysis, it is estimated that collectively about $10 billion dollars a month will be paid out.
For UBS analyst Jay Sole “inflation and the general macroeconomic environment have caused US consumers to postpone many discretionary purchases in the last 18 months. Clothing has proven to be the category most frequently preferred by consumers“, he highlighted.
Therefore, consumers with student loans are likely to greatly reduce their spending on clothing when they start paying off their debt. In this case, the brands and retailers that will be affected could be: Carter’s, Crocs, Foot Locker, Victoria’s Secret, American Eagle Outfitters, Gap, Nordstrom, Nike, Steve Madden, among others according to UBS.
during the pandemic approximately 44 million borrowers had a break in their payments, which was extended by a forgiveness plan promoted by the Joe Biden administration; however, for this year and due to the agreements for the debt ceiling, the payments will no longer be extended and will be resumed.
Source: La Opinion