Millennials finding it tough to bounce back from Great Recession
Posted On June 16, 2018
We grouse about their participation trophies and helicopter parenting. We stereotype them as overly entitled and self-absorbed. We laugh about their reactions to pop culture standards from before they were born. But instead of mocking millennials, we should perhaps be worried about them.
A new study from the Federal Reserve Bank of St.Louis found that many millennials have never gotten over the Great Recession of the late 2000s. The study found that the net worth of a typical family whose head was born in the 1980s, the front edge of the millennial generation, was 34 percent below expectations, and lost ground between 2010 and 2016, after the recession ended.
The Federal Reserve study found that the recession “significantly widened the wealth gap between young and old.” Setbacks were less steep for those born in the 1960s and ‘70s – 11 and 18 percent below predictions, respectively — while older generations were worth a bit more than expected.
The timing of the recession for the first wave of millennials could not have been worse. They were just entering college or the workforce. The cost of tuition was skyrocketing — and still is. Home ownership was decreasing – and for millennials, hasn’t really rebounded.
According to CNN, fewer than 45 percent of those 1980s-born millennials had bought a home by 2016. Yet they still carry high levels of debt, primarily in the form of student loans (surprise, surprise), car loans and credit card debt. Where a mortgage finances an investment that can rise with property values, these types of debt only sap wealth.
It is this, and not income, that is hurting millennials’ ability to bounce back.
The good news is, they still have time to right the ship. But the debt load is keeping it listing hard to starboard.Categories: Blog, Financial Services, Generation Y / Millennials, Wealth