Millennials have been called “the unluckiest generation.” Many members of this population segment –often defined as those born between 1980 and 1999 – came of age during the Great Recession, facing large student debt burdens, anemic wage growth and high unemployment.
More recently, though the employment situation of Gen Y, as millennials are also known, has greatly improved since 2010, there have been signs that tougher economic times may again be ahead. For instance, according to Rick Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income and regular Blog contributor, January jobs data suggested the most recent U.S. economic cycle may be cresting and turning downward, with slower payroll gains ahead.
But though millennials may have been born into unlucky economic circumstances, they seem to also be transforming their luck. While millennials are still confronting challenges, this population of 80 million in the U.S. is driving broader economic shifts that have long-term consequences. As Rick frequently points out, millennials are breaking with tradition, re-shaping the real estate market and fueling growth of the sharing economy. For more on this, I recently asked Rick for his take on Gen Y.
Rick, you’ve discussed at length the implications of the rising cost of college on the broader economy. What are some of those factors, and what does it have to do with millennials specifically? As many parents struggle to pay for their child’s education, some are forced to save less and work longer to prepare for retirement. This has a residual effect on the labor market, as older workers are staying in the workforce longer and making it harder for younger generations to find jobs. Another factor is the student loan situation. A recent report found that student loans have increased 84 percent since the recession, and that 40 million people have at least one student loan with an average balance of $29,000. Among the millennial population specifically, we’re seeing more young adults living with family members, putting off homeownership in favor of paying off debt.
What are some other millennial consumption trends that you’re seeing? It’s interesting because in the last decade, we’ve seen robust growth in the service sector of the labor market, from professional and business services to leisure and hospitality. We’re also seeing a manufacturing malaise due to slowing emerging economies and global trade. I believe that consumption demand patterns among millennials, including an emphasis on quality of life, is somewhat influencing this demand for travel and leisure, tech products and personal services, to name a few. The technology-driven revolution, which has a downward influence on price, continues to spur solid consumption growth, particularly in the personal services and travel/leisure categories, and is reflective of the generational shift to a newer millennial-oriented economy.
What about the sharing economy? Is it here to stay? Millennials have really jumped on the sharing economy bandwagon. They’re taking a more asset-light stance toward consumption, putting off buying a home in favor of renting, forgoing a car payment and taking Uber, or skipping a hotel in favor of booking a room via Airbnb. This trend really exemplifies the higher volumes/lower prices model we see from places like Amazon, driving more efficient consumption that’s not necessarily reflected in traditional economic metrics. In fact, millennial-spurred technological changes are just one of the big-picture trends transforming the U.S. economy that we have yet to see the statisticians fully address.
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