Fed Says Millennials Are Just Like Their Parents. Only Poorer (bloomberg.com)

Millennials, long presumed to have less interest in the nonstop consumption of goods that underpins the American economy, might not be that different after all, a new study from the Federal Reserve says. From a report: Their spending habits are a lot like the generations that came before them, they just have less money at this point in their lives, the Fed study found. The group born between 1981 and 1997 has fallen behind because many of them came of age during the financial crisis. "We find little evidence that millennial households have tastes and preference for consumption that are lower than those of earlier generations, once the effects of age, income, and a wide range of demographic characteristics are taken into account," wrote authors Christopher Kurz, Geng Li and Daniel J. Vine.

Their findings [PDF] are grounded in an analysis of spending, income, debt, net worth, and demographic factors among different generations. The conclusion that millennials aren't all that different also holds for the researchers' more granular examination of expenditures on cars, food, and housing. "It primarily is the differences in average age and then differences in average income that explain a large and important portion of the consumption wedge between millennials and other cohorts," they conclude. So much for the young folks favoring "experiences" over tangible goods.

Comments

We aren't poor

[Nidi62]

The group born between 1981 and 1997 has fallen behind because many of them came of age during the financial crisis.

We aren't poor. We've just seen what happens when the financial markets collapse and don't see the need to be leveraged out the ass with 2 car notes, a second mortgage (for those of us who were even lucky enough to find housing while it was still actually reasonably priced), and paying off 3 credit cards. We're spending less than we have so we aren't completely screwed come the next bust cycle. We'd love to be able to spend money, but we remember being un- or under-employed and how much that sucked while the Boomers with guaranteed pensions and social security (both being paid for by us with us likely to see no benefit or payout ourselves) trying to grab more and more.

Besides, any extra money we would have to spend on consumer goods that our parents bought with credit card debt is most likely wrapped up in another type of debt: student loans. The bonuses I've gotten from my company the last few years, instead of helping the local economy by being spent on house repairs/upgrades has gone towards paying off student loans. And this years'll be no different.

Re:We aren't poor

[Anonymous Coward]

I'd tend to agree, partially. Wages for younger people are lower than for their parents, and tuition costs are higher. So there some more restrictions on spending. But parent is definitely right about the certainty factor.

In my early and mid-20s I lived through two financial drops (2001 and 2008), and those sucked. I was either under- or un-employed for a couple years both times. So now, even though I make a pretty high wage for the area in which I live, my life style is pretty low-key. I shop like I make minimum wage, I live in a modest apartment. Any surplus money goes into savings because my future income is uncertain.

If I get sick, or the market tanks, or I get laid off due to automation, there is no safety net besides what I create. So my money doesn't go into nicer clothes, or a bigger house or a new car - it goes into saving for when the next crises happens. I've almost never carried any debt in my life (credit cards, mortgage or car loans) because I know one slip in the market or one long illness and I'm on my own. So I only buy what I can afford now and save as much as possible.

My parents worked in the same steady jobs for decades. Almost every company I've ever worked for (around a dozen of them, save two) are gone out of business. There is no security in the market, no steady base on which to make long-term spending plans like buying a home or a new car. I can't assume I can pay off a mortgage, so I rent cheap.

Businesses want people to spend more, but for that to happen they need to provide long term security, paid leave and a living wage. Otherwise people are going to shore up for a raining day and play it safe.

Re: BULLSHIT !!

[GameboyRMH]

Give it time, Trump still hasn't built his useless monument to xenophobia in the middle of the desert, the effects of his massive wealth transfer to the 1% haven't yet been felt, and he's still working on those easy-to-win trade wars.

Re:Why would people that is not the case.

[bigman2003]

I had a friend. (Okay, not a friend, I couldn't stand her, but she was an acquaintance)

She was going to build 'passiv haus' (we're American, but she liked the German spelling) communities to save energy, etc. etc.

She drove from California to New York at least a dozen times to support this plan. I'm pretty sure she used more fuel on her roadtrips than she would have saved had the plan actually worked. The plan didn't work, and she ended up finding out that Upstate New York is really cold, and she didn't want to live in an unheated house in that environment.

But she still talks about how dedicated she was...she does NOT like to hear about the wasted fuel.

Her marriage went really bad because she ignored her spouse while being a road-tripping ecowarrior. And absolutely none of this is her fault- the system is against her.

But damn...she can feel high and mighty knowing that she was THINKING about this stuff while you were watching TV.

Re:Price is right

[jeff4747]

Part of that may be taxes.

You can sell a car to pay the taxes on the other prizes you won. It's pretty hard to sell a vacation.

OK

[cascadingstylesheet]

OK, so what do you propose doing about it?

Well, for one thing, pretty sure that bringing in countless foreigners to compete for jobs isn't going to help, but what do I know.

It's unpopular to say that, so not enough of us do say it. But popularity doesn't seem to be taking care of the problem.

Here's why - in a way you are able to understand.

[Anonymous Coward]

I know your just derping. But how is Trump's debt different from FDR's (and every other scumbag in between)?

FDR: Debt for government spending to get us out of the Depression and then to pay for WWII.
Clinton actually balanced the budget....then...
W.Bush sstarting spending like a mad man for unecessary wars that created ISIS.
Obama, had to bail us out of a Republican causes financial mess.
Trump's debt is for the tax cuts for the Republican and his donors because that's what they paid for.

Some reasons why Trump sucks and his supporters are all morons:
        1. N. Korea is back at their old shenanigans. More nukes! (So much for the "master deal maker")
        2. After all that Reality TV Drama horseshit and pissing off Canada and Mexico, the new NAFTA is basically what was originally signed into law by Clinton.
        3. The whole Caravan and border shit is nothing but a distraction and an overblown problem.
        4. The tax cut did jack shit for me. And in the meantime, the national debt will increase another trillion or so and because of it, interests rates will rise, our standard of living will decrease, and our economy will slow - all to give his and the Republican donors their tax break at our expense
        5. He undid Obama's environmental protections.
        6. The wildfires in California were his fault: he didn't appoint an under secretary of Natural Resources and Environment until September of this year.
        7. He hasn't been appointing people to important government positions - but playing golf
        8. A useless tradewar that’s costing too much and hurting our economy.
        9. Neutered the Consumer Financial Protection Bureau.
        10. We still don’t have a better healthcare system than Obamacare. He did promise one!!
        11. The wall hasn’t been built. (Good thing, but still a broken promise)
        12. Still no trillion dollars in infrastructure spending. (Another broken promise.)
        13. Firing people who are doing their job and not doing Trump's unethical and illegal bidding.