It’s tough being a millennial. First blamed for killing everything from big box gyms to American cheese, this demographic group has much bigger problems: their finances.
Elder millennials are finding themselves with the highest level of debt of any age group. Americans aged 35 to 44 carry median liabilities of about $140,000, according to the Federal Reserve’s Survey of Consumer Finances . On top of that, the same demographic was also the least likely to identify as “financially well” in Bank of America’s (BAC) 2023 Workplace Benefits survey.
Two Recessions and a Pandemic
There are a couple of reasons why millennials are struggling financially — or, rather, a couple of recessions.
For the first of these, the Great Recession, older millennials had just started their careers. That made them more vulnerable to financial woes, because they were at the start of their earnings curve. Indeed, wealth accumulation for those born in the 1980s was 34% lower than expected in a 2018 report by the St. Louis Fed .
The second recession came with the pandemic, and its unprecedented impact on the U.S. job market. Even though the subsequent labor boom provided some relief, recent economic data signal a cooling job market.
The Power of Pressure
All this has left many millennials trapped in a cycle of paying for a lifestyle they can’t afford.
Typically, Americans in this age group are entering an era of financial stability in their lives, able to afford luxuries, while also reaching milestones like owning a home and raising children.
But with homeownership down and childcare costs going through the roof, the economic climate to achieve this balance is no longer given.
What has remained is the societal pressure. That may partially explain why older millennials are still outspending their younger counterparts on discretionary purchases like retail and restaurants, despite amassing a combined trillions of dollars in debt.
So where does this leave us, and the U.S. economy?
Millennials are the largest working population in the nation, so their financial wellbeing can have knock-on effects from consumer spending — which drives the U.S. economy — to generational wealth building, which can play an important role in economic mobility.
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