Millennials! Kids today!
They don’t know anything! They’re all a bunch of snowflakes! They can’t do anything with a set of instructions written for a 5-year old!
Right?
So, at least, go the clichés — at least among some grumpier members of older generations.
Every new generation gets shade from the people who went before, and millennials — those born between 1980 and 1999 — are no different.
Like it or not, the fate of the economy and the stock market will soon be in millennials’ hands. The oldest are over 35 — old enough to run for president.
But like it or not, the fate of the economy and the stock market will soon be in their hands.
They’re the largest generation in U.S. history — about 90 million strong — and they’re starting to move into their years of peak earnings, spending, influence and leadership.
The oldest are now over 35 and — like Pete Buttigieg — is now old enough even to run for president. Millennials are starting to shape the present, and they will be shaping the future.
So who are they? What do they really think? “Millennials With Money,” a new report by analysts Pat Tschosik and Rob Anderson at Ned Davis Research and Danielle Fox at Research Fox, was presented this week at the Ned Davis Research Conference in Boston.
And in a nutshell, almost everything you’ve been told about millennials may be wrong.
Here are some of the myths the report attempts to explodes:
1. ‘They can’t afford anything because of all their student debt.’
Not true.
Sure, they have more student debt than previous generations — and America’s $1.5 trillion in student debt is widely regarded as a crisis that’s affecting the daily lives of many. But millennials have less mortgage, car loan, and credit-card debt than their elders did. Overall they’re actually better off than previous, recent generations were at the same stage.
Among households today headed by 27- to 35-year-olds, the average total debt is $91,000. In 2007, adjusted for inflation, it was $132,000. You have to go back to the 1990s to find average household debts that were lower for young adults.
And there’s one big difference between then and now: Much lower interest rates.
Bottom line? Millennials are now paying a smaller portion of their income, on average, than previous generations at the same stage of life, says the report.
Today those age 27 to 35 are paying an average of 14.7% of their annual income in debt payments. The average for their predecessors since at least the early 1990s: 17.9%. The peak, late last decade, was over 20%.
2. ‘They’re not interested in the stock market because they’re all socialists.’
Not true.
Yes, many of them flocked to the presidential campaign of self-described Democratic Socialist Bernie Sanders in 2016. Yes, New York Democratic congresswoman Alexandria Ocasio-Cortez, aka “AOC,” may be their new poster child.
But it turns out millennials quite like capitalism where it counts — in their investments.
“They have as much stock ownership as Baby Boomers did at the same age,” says Ned Davis’ Tschosik. Among households headed by the under-35 set, 13.8% own stocks, they found. The figure for Boomers in 1989: 14.7%.
And millennials are aggressive about investing because they think they have to be. “They don’t believe they’ll have Social Security,” says Tschosik. “They don’t believe these retirement programs will be there for them.”
Getty Images/iStockphoto
3. ‘They don’t want to buy a home.’
Not true.
Millennials are on a similar homeownership path to previous generations, data show, although the housing collapse of last decade, and the tough jobs market that followed set them back “two or three years,” said Danielle Fox.
Contrary to the popular myth that they’re all still living with their parents, “85% of millennials” have left home, she added.
And they’re moving out of rentals and into their own homes pretty quickly, data show. Homeownership rates have risen particularly quickly among 25- to 34-year-olds after bottoming out three years ago.
The news from millennials should be bullish for the housing industry. For the next five years, more and more of them will be moving into their 30s — the age when people typically buy a home.
Until 2024, the number of millennials entering their 30s will exceed the number of baby boomers entering their 80s — the decade when people typically leave the housing market.
4. ‘They don’t own cars.’
OK, so Uber and Lyft LYFT, -1.83% are changing everything.
You no longer need to own your own car to live and work in many parts of America, especially in and around cities.
And, yes, millennials spend a lower share of their income on transportation than previous generations at the same stage.
But the differences have been grossly exaggerated. People age 25 to 34 spend on average 16.5% of their income on transportation. The figure for 25 to 34-year-olds back in 1987? Some 18.8%.
Way back in 2001, before ridesharing was even an idea, about 82.5% of those aged 25 to 34 owned their own car.
Today? 82.6%.
5. ‘They spend differently from previous generations.’
OK, so baby boomers didn’t spend their money on Apple’s iPhones AAPL, -0.04% or Netflix NFLX, -4.49% streaming services when they were 30, because neither of those things existed. But overall the spending differences between millennials and previous generations have been grossly exaggerated.
Millennial spending mostly “shows a continuation of long-term trends,” the report finds.
They spend similar amounts to previous generations at the same stage on things like food and entertainment, research finds, and they spend more on housing and health care, and less on transportation and clothing.
But in most cases their spending patterns are in keeping with long-term trends. For example, each generation of 25-34-year-olds has spent a smaller and smaller share of their incomes on clothing, from 6% in the late 1980s to 3.7% today.
Cheap imports have made clothes much cheaper in real terms over that time. And young adults today may be more interested in showing off the latest iPhone than the latest threads.
The biggest jump: Health care, where they are spending 5.7% of their incomes. As recently as 10 years ago that was 3.7%.
So what happens next?
The millennials are now moving into the ages when people typically spend the most, the report says. Their 30s and 40s, when many people raise a family. Watch spending rise on things like children’s clothes, pets, amusement parks, beauty, personal care and even household fittings and supplies.
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