NY Fed: 9 Million Student Loan Borrowers to See Credit Score Drops

Inflation and Fed Policy

• 🎯 Minneapolis Fed President Neel Kashkari stated the biggest challenge for the Fed is finishing the job of getting inflation back down to the 2% target.
• ⚠️ Policy uncertainty is complicating the Fed's analysis of the economy.

Economic Indicators

• 📊 While the US is less exposed to trade than other economies, imports are significant.
• 📈 Durable goods reports came in above expectations, with a 0.9% decline expected, but ex-transportation was healthy.
• 📉 A negative business investment number (-0.3%) for new orders of capital goods warrants watching to see if soft data sentiment is flowing into hard data.
• 💰 Goldman Sachs maintained its Q1 GDP tracking at 1.3% after the report.

Student Loans and Credit Scores

• 📌 The New York Fed reported that 9 million student loan borrowers will face significant credit score drops due to changes preceding the Trump administration.
• 📉 New student loan delinquencies in the first half of 2025 can reduce credit scores by approximately 150 points.
• ⚠️ Borrowers with prime or subprime credit may see their credit limits reduced or access to credit impacted.
• 📈 Student loan delinquency is expected to surpass pre-pandemic levels.
• 📉 While a large number, this group's spending impact might be limited, but it adds to an overall stress scenario, especially with potential new student loan payment requirements.