Nonfinancial Assets Lead the Drop
Assets of young households shrunk during the Great Recession and, perhaps more surprisingly, continued to shrink well into the recovery. The median real value of assets fell from $38,200 in 2010 to $29,600 in 2013. This is consistent with the trend in the total population. Nonfinancial assets are a much larger component of young people’s balance sheets than financial assets. The share of young people holding financial assets, however, is higher than the share with nonfinancial assets.Within nonfinancial assets, young households are less likely to hold real estate and business equity than older cohorts. The share of young households who own a home reached an all-time low in 2013, at 35.6 percent. In addition, the real median value of homes owned by young households was hit harder by the housing bust, down 29 percent from the 2007 peak. Although 11.7 percent of all households have equity in businesses, only 6.5 percent of young households fall into this group. The portion of young households with business equity has been declining since 1992. Student loan debt may have weighed on investment in businesses.
Millennials are less likely to own a car than the total population. The decline seen during the recession coincided with fewer Millennials getting licenses. Although changing preferences may play a role, it appears that cyclical factors are also at work. The share of Millennials who own a car increased 3.3 percentage points from 2010. Continued labor market improvement may lead to increased demand for autos from Millennials.
Financial assets are a different story. Young people are only slightly less likely to hold financial assets compared to all families at 92.5 percent. The median value, however, is much lower, at $5,800 compared to $21,200 for all families and a relatively large share is in transaction accounts. Looking at other financial assets, Millennials seem to be increasingly less likely to have money invested (bottom chart). This helped Millennials’ financial assets weather the financial crisis better than the rest of the population. Young households’ total stock holdings (both direct and indirect), however, have fallen from the 2004 peak. Although difficulty saving is likely holding back investing, a 2013 Wells Fargo survey on Millennials showed 60 percent still view the stock market as the best place to invest. That said, Millennials allocate less of their savings to equities than Baby Boomers.
Although young people’s balance sheets have yet to see much of a recovery since the recession, not all Millennials are struggling. The mean net worth is significantly higher than the median, suggesting that there is a subset of Millennials whose balance sheets are fairly strong. Although we would like to see a stronger recovery across the board, it is still encouraging that at least parts of the Millennial generation are doing well.
Editors’ Picks
EUR/USD stays near 1.0750 following Monday's indecisive action
EUR/USD continues to fluctuate in a tight channel at around 1.0750 after posting small gains on Monday. Disappointing Factory Orders data from Germany limits the Euro's gains as investors keep a close eye on comments from central bankers.
GBP/USD retreats below 1.2550 as USD recovers
GBP/USD stays under modest bearish pressure and trades below 1.2550 in the European session on Tuesday. The cautious market stance helps the USD hold its ground and doesn't allow the pair to regain its traction. The Bank of England will announce policy decisions on Thursday.
Gold price turns red below $2,320 amid renewed US dollar demand
Gold trades in negative territory below $2,320 as the souring mood allows the USD to find demand on Tuesday. Nevertheless, the benchmark 10-year US Treasury bond yield stays below 4.5% and helps XAU/USD limit its losses.
Ripple lawsuit develops with SEC reply under seal, XRP holders await public redacted versions
Ripple lawsuit’s latest development is Securities and Exchange Commission (SEC) filing, under seal. The regulator has filed its reply brief and supporting exhibits and the documents will be made public on Wednesday, May 8.
The impact of economic indicators and global dynamics on the US Dollar
Recent labor market data suggest a cooling economy. The disappointing job creation and rising unemployment hint at a slackening demand for labor, which, coupled with subdued wage growth, could signal a slower economic trajectory.
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.