Retailers, beware: Resumption of student loan payments could lead some buyers to pull back

abcnews.go.com:

The reprieve is over

WASHINGTON — The reprieve is over. Just as the American economy is struggling with high inflation and interest rates, the coming resumption of student loan payments poses yet another potential challenge.

The suspension of federal student loan payments, which took effect at the height of the pandemic in 2020, expires late this summer. Interest will start accruing again in September. Payments will resume in October.

Though many hoped their loans might at least be lightened, the Supreme Court last week struck down a Biden administration plan that would have given millions of people some relief from the return of the loan payments. The Biden plan would have canceled up to $20,000 in federal student loans for 43 million borrowers; 20 million would have had their loans erased entirely. The court ruled that the plan exceeded the government’s authority.

The restart of those payments will force many people to start paying hundreds of dollars in loans each month — money they had been spending elsewhere for the past three years. Their pullback in spending on goods and services won't likely make a serious dent in the $26 trillion U.S. economy, the world's largest. Any pain instead will likely be concentrated in a few industries, notably e-commerce companies, bars and restaurants and some major retailers.

Even if all that won't be enough to weaken overall economic growth, the shift in spending by many young adults could inject further uncertainty into an economy already beset by uncertainties, from whether the Fed will manage to tame inflation and halt its interest rate hikes to whether a recession is destined to strike by next year, as many economists still fear.

Josh Bivens, chief economist at the Economic