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A12 BUSINESS
Wednesday 5 July 2023

Retailers, beware: Resumption of

student loan payments could lead

some buyers to pull back

A shopper passes a display of televisions on sale in a Costco
warehouse Thursday, June 22, 2023, in Colorado Springs, Colo.
Associated Press

By PAUL WISEMAN a serious dent in the $26
AP Economics Writer trillion U.S. economy, the
WASHINGTON (AP) — The world’s largest. Any pain
reprieve is over. Just as instead will likely be con-
the American economy is centrated in a few indus-
struggling with high infla- tries, notably e-commerce
tion and interest rates, the companies, bars and res-
coming resumption of stu- taurants and some major
dent loan payments pos- retailers.
es yet another potential Even if all that won’t be
challenge. The suspension enough to weaken over-
of federal student loan all economic growth, the
payments, which took ef- shift in spending by many
fect at the height of the young adults could inject
pandemic in 2020, expires further uncertainty into
late this summer. Interest an economy already be-
will start accruing again in set by uncertainties, from
September. Payments will whether the Fed will man-
resume in October. age to tame inflation and
Though many hoped their halt its interest rate hikes
loans might at least be to whether a recession is
lightened, the Supreme destined to strike by next
Court last week struck year, as many economists
down a Biden administra- still fear. Josh Bivens, chief
tion plan that would have economist at the Econom-
given millions of people ic Policy Institute think tank,
some relief from the return suggested that the likely
of the loan payments. The hit to the economy might
Biden plan would have amount to perhaps one-
canceled up to $20,000 in third of a percentage point
federal student loans for of gross domestic product
43 million borrowers; 20 mil- the nation’s total output
lion would have had their of goods and services or
loans erased entirely. The about $85 billion or $90 bil-
court ruled that the plan lion a year.q
exceeded the govern-
ment’s authority.
The restart of those pay-
ments will force many
people to start paying
hundreds of dollars in loans
each month money they
had been spending else-
where for the past three
years. Their pullback in
spending on goods and
services won’t likely make