Generation Why?
The term “Millennial” has received a great deal of circulation in recent years. Although there is no precise definition of the Millennial generation, a range of birth years from the early 1980s to the early 2000s is typically used to describe this cohort. For our purposes, we define Millennials as anyone currently aged 16-34.With a population of 85 million, Millennials are the largest generation in U.S. history, 10 million more than the Baby Boomer generation. In addition to accounting for a significant share of the total population of this country, Millennials comprise roughly 35 percent of the U.S. working age population, defined as the total population of people aged 16 and over (top chart). With many of them just starting their careers, the group will likely play a key role in shaping the economic landscape in the coming years.
What the Future Holds
Millennials’ economic situation was heavily influenced by the Great Recession, which for many people in this cohort was their first taste of economic hardship. Worse yet, many Millennials graduated school in the midst of the downturn, which will likely have lingering effects on their income and participation in the labor market. According to a Wells Fargo survey of Millennials, the Great Recession taught 80 percent of this group that they have to save now to survive future economic problems.1 Despite this, we have seen that this cohort is not making significant strides in saving for retirement. This is likely due in part to the oft-mentioned student debt burdens this generation has been saddled with; the survey indicated that Millennials’ main financial concern after day-to-day expenses was student debt. This has significant implications, as student debt burdens have weighed on Millennials’ ability to make big ticket purchases, such as buying a home or investing in financial assets.Student debt is a double-edged sword, however, as more Millennials aged 25-34 have a Bachelor’s degree or higher than the general populace aged 25 and over (middle chart). This trend emerged well ahead of the downturn and should ultimately benefit this cohort and the broader economy. Data show that increased educational attainment leads to better wages, higher labor force participation and a greater chance of finding employment (bottom chart). Thus, while debt burdens will weigh on net worth and spending power in the short term, the hope is that their higher educational attainment will start to pay increased dividends in the longer term. As their financial situation improves, we expect more Millennials will begin to purchase homes and invest in the stock market, giving a boost to asset values in the broader economy.
In future installments of this series, we will dive deeper into a multitude of aspects of the economic situation of Millennials—stay tuned for more.
Read part II and part III of Millennials in the Economy
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
Discover how to make money in forex is easy if you know how the bankers trade!
5 Forex News Events You Need To Know
In the fast moving world of currency markets, it is extremely important for new traders to know the list of important forex news...
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and...
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.