There is a lot of talk about millennials having pretty much failed to make it into the coveted American middle class, which means that if a recession hits, they would have a hard time surviving. It’s generally blamed on an inauspicious start: Many were graduating from college at an unfortunate time for getting jobs--amid a financial crisis.
“The severity of the 2007 Global Financial Crisis and the recession that followed may have left a lasting impression on millennials, who were coming of age at that time, much like the Great Depression left a lasting impression on the Greatest Generation,” a 2018 Fed report notes.
They haven’t gotten back on their feet yet, so the narrative goes, and if another recession hits, they’ll be the first to suffer.
They’re behind economically, and they might not have time to catch up to any form of stability before the rug is whipped out from under them again.
But the devil is in the data details, and there are two very different stories to be told here, depending on which set of data makes for the best headline.
A lot of the media attention surrounding millennials as the poorest generation was gleaned from a Fed report from the fourth quarter of last year. Skimming that report would lead you to the juicy headline that Millennials are poor because they’re not making as much money as earlier generations.
But it’s a huge report, and those aren’t really its findings.
Related: Safe Haven Assets Shine As Recession Looms What many media outlets latched on to at the time was the Fed’s data showing that Millennials as individuals were making less money than Gen-Xers or Baby Boomers. That, presumably, mean they weren’t making it into the middle class.
However, for anyone with the patience to read the entire Fed report, researchers noted that when it came to families, millennials were actually making more.
In other words, Millennials individuals = poor. Millennial families = pretty well off.
Millennial women in the workforce make the difference.
But that was last year.
What about this year?
Now, an Urban Institute report from July suggests that Millennials are getting shut out of the housing market to the point that their homeownership rate is 8 percent lower than the two previous generations’.
They also aren’t saving or investing like their predecessors, the Atlantic notes, pointing out that the share of Americans under the age of 35 owning stocks dropped to 37 percent in 2018, from 55 percent in 2001.
That, actually, might make them the winners if a recession hits and Wall Street tumbles. At least it will level the playing field.
The mounds of Millennial data, somehow, is very inconclusive.
Chances are, they are more resilient than everyone seems to think.
We may find out soon enough.
Growing numbers of economists have been jumping on the recession bandwagon of late, saying we will be recession mode by 2021, with a few variances as to when exactly in the year it will hit.
And another apparent recession warning came this week when new data emerged signaling that the rich have cut off their spending. That typically indicates they think something bad is about to happen.
But it’s more than that.
According to CNBC, when the wealthy stop spending, it creates a drag on economic growth. The indications have been felt most noticeably in high-end real estate, which is experiencing its worst year since the 2008 financial crisis.
The CNBC report also notes that luxury retailers are scrambling to stay afloat, art auctions sales numbers are declining and super-luxury cars haven’t moved off popular auction blocks.
And then there’s the U.S. Treasury Yield, a tried and true barometer for pending recession. When the 3-month/10-year curve becomes inverted, it’s typically a sign of an economic downturn. The yield curve did just that on Tuesday, with 1-, 2- and 3-month Treasury bills all paying higher interest rates than 30-year Treasury bonds.
The WhiteHouse insists that nothing is amiss with the economy, and whether or not we are heading for a recession has become a full-blown partisan issue.
Recession fears or not, overall, millennials like to treat themselves, even though financial stability has proven rather elusive.
And perhaps coming of age during one financial crisis gives you the mental wherewithal to survive the second-coming.
By Michael Scott for conil.me
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