Consumer sentiment may have reached the highest level since 2004, but millennials are now less optimistic than baby boomers.
That’s the first time Americans younger than 35 say they actually have less consumer confidence than those aged 55 and over, according to data from the University of Michigan, Haver Analytics and Deutsche Bank Global Research. This hasn’t happened in the last six decades that the consumer sentiment of these two generations has been compared.
Millennials shoulder more student loan debt than any other generation and face house prices that are far higher than their parents did at their age. Student loan debt has reached $1.4 trillion as the cost of college has soared. And spending no more than 30% of their income on rent or a mortgage, a golden rule for decades, is near-impossible for many young Americans.
The fortunes of both generations are inextricably tied. Your parents’ income helps determine your future. Children raised in low-income American families will likely also have low incomes as adults, while children raised in high-income families can anticipate a much bigger jump in income, according to “Economic Mobility in the United States,” produced by researchers at Stanford University. It was funded by the Pew Charitable Trusts, a nonprofit public-policy organization.
Americans do appear to be concerned about the economic prospects of those who come after them. Just 37% of Americans believe that today’s children will grow up to be better off financially than their parents, a 2017 study by the Pew Research Center concluded. Such sentiment is relatively unchanged from 2015. It found that 49% of 18- to 29-year-olds hold the view that the next generation will be worse off, while 61% of Americans aged 50 and over believe the next generation will be worse off.
“The U.S. may be one of the richest countries in the world, with one of the highest per capita gross domestic products among major nations, but Americans are fairly pessimistic about economic prospects for their country’s children,” Bruce Stokes, the study’s author, wrote for Pew, a nonprofit, nonpartisan think tank in Washington, D.C.
Pew provides context to young Americans’ feelings about the future. For the first time in more than 130 years, American adults aged 18 to 34 were more likely to live with their parents than with a spouse or partner in their own household, partly due to millennials getting married later in life and spiraling student debt.
But young Americans still have reason to be optimistic. Nearly half (47%) of working millennials have $15,000 or more in savings and 16% have $100,000 or more in savings, according to Bank of America’s recent “Better Money Habits” report.
However, the bank cast a wide net when defining savings: It asked about the total amount of savings, including bank savings/checking accounts, IRA, 401(k) and other retirement or investment accounts. A nine-year bull market has clearly helped. Still, the findings stand in sharp contrast to Americans as a whole, who are saving less money than ever.
Peter Schiff, the chief executive of Euro Pacific Capital, and a market pundit who often espouses what critics describe as a bearish outlook for the equity market, says the middle class has been gutted by over-regulation, an escalating cost of living and stagnant wages. “Families are smaller,” he told MarketWatch. “They can’t afford to raise their kids or send them to college without taking out a lot of student debt. It’s too expensive. People are getting married later in life and many don’t get married at all.”