Monthly Archives: March 2012

“Generation Walk”

Selling to Millennials poses a special set of challenges, especially for older generations. But those marketing and selling cars to Millennials have an even higher bar to clear: Millennials are just not that interested in driving or owning automobiles.

According to the New York Times, less than half of teenagers eligible to drive had obtained a license in 2008, down from two thirds in 1998. The number of twenty-somethings with a driver’s license has also dropped. And only 27% of new car buyers are in their twenties or early thirties, down from 38% a generation ago.

As with their reluctance to buy a home, part of Millennials’ reluctance to buy cars is a result of their economic circumstances, including high generational unemployment and high indebtedness. A car represents the kind of adult investment that many Millennials have been reluctant to undertake. In addition, many Millennials live in urban areas with public transportation and some may even be sensitive to the environmental impact of automobile ownership.

As we’ve noted ( ) carmakers are attempting to woo potential Millennial car buyers with generationally-specific features and marketing. But first, they have to somehow get them interested in driving.

Gen X Stuck In The Middle

Gen X Stuck in the Middle ImageGeneration X has a reputation for expecting the worst and many of their career paths are, well, meeting expectations. Gen Xers are stuck between the two largest generations, Boomers and Millennials, and they are feeling the squeeze at work. Boomers are delaying retirement and Millennials are rising fast and the advancement of Generation X has suffered, according to a study of the Canadian financial industry by PricewaterhouseCoopers.

Despite forming the largest single cohort in the industry, Gen Xers are increasingly passed over when it comes to promotions. While the rates of promotion for Millennials have held fairly steady, the rates for Gen Xers have fallen at exactly the point in their careers when they should have risen sharply.

“With older workers staying on longer—many in senior positions—and younger employees with a hunger for advancement coming up from below, the potential for disaffection in the Generation X ranks is significant,” according to the report. It’s a feeling they’re familiar with.–gen-x-forget-hard-done-by-gen-y-it-s-their-older-counterparts-getting-the-workplace-squeeze

Hotels Adapt to Millennials

Millennials are beginning to demonstrate an inclination to travel and hotels are keen to accommodate them. Travel spending by Millennials rose 20% in 2010, according to the New York Times, and now nearly every major hotel brand has developed products to appeal to them.

For Millennials, a hotel being “interesting is more important than comfort,” according to the dean of the hotel management division at New York University. That’s the reverse of the Baby Boomer market, he adds. Another key feature: Wi-Fi.  “High-speed internet is like air to Millennials,” he adds – they consider it as important as beds and towels in a hotel.

Hotels are also redesigning facilities to be more casual and social and to provide more power and data portals for Millennials to plug in. Multiple bars and restaurants as well as increased social activities are designed to keep Millennial guests entertained enough to stay on the premises throughout the day and evening. And some hotels are catering to Millennial tendencies even after the guests leave. Starwood, for example, has a 20-person team devoted to responding to complaints and comments on social media sites.

Boomers’ Retirements Will Strain Portfolios

Boomers Retirement Strains Portfolios ImageAs Baby Boomers retire and turn to their portfolios to support themselves, the returns on those investments are likely to diminish, Robert Arnott of Research Affiliates, LLC tells the Wall Street Journal.  The large number of Boomers retiring at once will glut the market with the stocks and bonds they are trying to sell, reducing value. Meanwhile, the working population will have fewer resources to buy them and less interest in doing so than previous generations. The result: anemic returns.

To make matters worse, the high proportion of retired population (once Boomers retire) to working population will increase the cost of labor and, therefore, everything else. So the cost of living will go up for Boomer retirees while their resources shrink.

The solution for Boomers? According to Arnott, the best bets are saving more aggressively and investing in emerging markets, “Invest in economies that aren’t afflicted by the 3-D hurricane of deficit, debt and demography; and diversify into markets that can serve us well in a reflationary world.”

Boomers Selling Their Houses – But Are There Any Buyers?

Boomers Selling Houses ImageA new study by the Bipartisan Policy Center’s Housing Commission sees many Baby Boomers selling their homes as age, downsize, and retire. The study projects that Boomers will divest themselves of as many as 26 million housing units over the next 20 years.

The problem is that the generation that should now be entering the market for homes, the Millennials, are not generally in a position to afford them. As we noted last week, a combination of high real estate values, lower real wages, tight credit, and high indebtedness is preventing many Millennials from realizing the dream of owning a home at the same age as previous generations. Ironically, most Millennials who can’t buy homes now are children of the Baby Boom generation that is trying to sell them.

The study warns that the glut of expensive housing put on the market by Boomers, combined with the constrained home-buying power of Millennials, could depress the housing market for some time to come while keeping rents high.

Generation Rent?

Generation Rent ImageMillennials are starting to feel like the dream of home ownership is just that – a dream. As the leading edge of the generation moves into its 30s, many of them are still finding the goal of owning a home elusive. According to the Federal Reserve, only 9% of 29-34 year olds got a mortgage between 2009 and 2011. That’s about half the rate of a decade ago for the same age group. According to, only 11% of twenty-somethings have a mortgage compared with figure of 30% for all consumers.

Millennials are victims of a perfect storm that’s keeping them out of the housing market. Unemployment among Millennials is high and so is debt, especially student loan debt (>$1 trillion nationwide – that’s more than all credit card debt!). To make matters worse, credit is extremely tight and, despite the decline in real estate, average home prices are still historically high relative to average income.

As many as 85% of them move home after college. When they do strike out on their own, renting seems like the only viable option, not just for now, but for the foreseeable future. For previous generations, events like retirement and second homes required long-term financial planning. Now, it appears long-term financial planning and saving will be required for most Millennials just to buy their first house.

Millennials and “Hyperconnectivity”

Hyperconnectivity ImageThe Millennials are the connected generation. Statistics show them to be early adopters and avid users and consumers of all kinds of communication technology including texting, social networking, email, blogging, smartphones, etc. Now, the Pew Center is asking how all of that “hyperconnectivity” will affect the generation’s personality.

Pew surveyed over a thousand internet experts about the long term effect of hyperconnectivity on Millennials. 42% saw at least one significant downside: Millennials will be apt to make poorly informed decisions based on shallow or incorrect information the get from the internet or their connected peers. On the other hand, 55% believed Millennials would eventually hone their ability to sift the good from the bad in the digital world they live in – and will thus eventually be able to find better answers than older generations.

The study even coined an acronym for the apparent learning disability of the distracted, short-attention-span, hyperconnected Millennials: A.O.A.D.D. for “Always-On Attention Deficit Disorder.” However, several experts pointed out that this problem is not restricted to Millennials. Other generations are quickly becoming just as connected, and as distracted.