Quick Link: Don’t Rely on the New York Fed’s Numbers

The Wall Street Journal’s Justin Lahart created a chart from the Federal Reserve Bank of New York showing the cumulative percent change in consumer debt by type since Q3 2008.

I’ve seen the NY Fed’s numbers before. Here’s the site. The WSJ took the data from the “Total Debt Balance and Composition” graph to create the chart. Reading the report, people will note that the amount of student loan debt outstanding is a lot lower than what we hear regularly from other outlets, particularly the popular Student Debt Clock operated by finaid.org. The WSJ says it’s $550 billion while finaid says it’s $934 billion. Which should we believe?

I don’t know the difference in the methodologies, but I find the NY Fed low-balls other amounts of debt, which weakens its credibility. For example, it says that as of Q2 2011, there’s $11.4 trillion of outstanding household debt. Meanwhile, the main Fed’s Flow of Funds Accounts release (Z.1) calculates $13.4 trillion household debt in Q1 2011. While I believe the WSJ calculated the percent changes accurately and in good faith, and that the NY Fed is consistent in its methodology, I don’t trust the latter’s numbers. Does that mean finaid’s debt clock is more accurate? Of course not; they could both be off. However, the main Fed branch generates the G.19 Release on consumer debt, not the NY Fed, so I’m going to trust its numbers before one of the branch’s, even if it doesn’t tell us what’s student debt and what isn’t. That said, I wish finaid cited sources and that the government would be more informative.

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