They buy homes. They purchase cars. They take vacations. The millennials, it turns out, are pretty much like every other generation of the last 70 years.
It’s a good thing they are, because the nation’s future rests on their shoulders, and it’s a weighty burden. The $19 trillion national debt is now 105% of GDP, the highest portion since the 1940s. Medicare is on track to run short of money in 2030. Somebody needs to create the wealth that will keep America humming for the next 50 years, and while they’re at it, figure out how to keep humans employed and prosperous as robots continue their march to dominance.
There are 75.4 million Americans between the ages of 18 and 34, which means millennials just became the most populous generation in the country. And their ranks will swell to roughly 81 million by the 2030s, according to Pew Research, on account of immigration. The baby boomers, by contrast, number 74.9 million, and their numbers will steadily decline, as immortality eludes them and they begin to die off.
Millennials may seem like unlikely heroes, because they’ve been derided as “the cheapest generation” and lampooned as narcissistic, lazy, entitled, promiscuous and worse (often by baby boomers who are … the parents of millennials!) Let’s say some of this is true. Does it make today’s young adults much different from the boomers who blissed out at Woodstock, or the Gen Xers who grew up on video games and "Fast Times at Ridgemont High"? Not really. Blame youth, not cultural rot.
Besides, millennials are acting more like their parents the older they get. “We’ve been in the workforce for over a decade,” says Britt Hysen, 27, editor of Millennial Magazine. “We’re already taking over leadership in America. Some of us are running billion-dollar enterprises.” Mark Zuckerberg, the 31-year-old CEO of Facebook (FB) is the most prominent millennial business leader, and it's fair to say he represents the mission-driven approach of many cohorts. The CEOs of Airbnb, Box and Glu Mobile are close behind.
Millennials are making their mark on Main Street as well. They now buy more homes than any other age group, for instance, with buyers under 35 accounting for 35% of all sales, according to the National Association of Realtors. And they’re not buying lofts in Hipsterville. Just 17% of millennial home purchases are in cities, while 83% are in suburbs, small towns or rural areas. Of millennial buyers, 64% are married and 45% have kids. Not bad for slackers who, just a few years ago, were shacked up in their parents’ basements.
The unemployment rate for 20-to-24-year-olds, at 8.4%, is 3.4 points higher than for the labor force overall. But the unemployment rate for young workers is always higher. The gap was 3.9 percentage points in 1980, 3.2 points in 1990, and 3.5 points in 2000. So young people have jobs in more or less the same proportion to their elders that they always have.
No less an authority than Goldman Sachs once declared that “millennials have been reluctant to buy items such as cars, music and luxury goods.” Not any more. Millennials now account for 29% of car sales, according to J.D. Power, up from 17% in 2010. As for music, millennials spend about $750 per year on media content, and they’re driving the shift away from traditional media to streaming services. “The ‘generation that won’t spend’ is spending a lot on media,’” Deloitte declared recently.
Luxury purveyors have reason to worry, though, since millennials tend to be value shoppers unlikely to pay up for status items, according to a 2016 J.D. Power analysis of this overanalyzed generation. That’s a bummer for Cartier and Prada, but it’s a shrewd way to shop that ought to leave young consumers with more money to spend on homes, furnishings, cars, and gizmos that drive economic growth, and maybe even Social Security funding.
Economists have bemoaned the thrifty millennials since it first became apparent they weren’t going to splurge the way their baby boomer parents did. But instead of rejecting the whole consumer economy in a mass repudiation of capitalism, millennials probably just got a late start. “We graduated college into high unemployment, which prevented a lot of us from getting jobs,” says Hysen. “Our student loan debt has prevented many of us from having the income to buy a home or car.” Worth pointing out: That recession was caused in large part by an unsustainable amount of debt taken out not by millennials, but by prior generations, which caused the worst housing bust in a century.
While the recession held back millennials, it may also have taught them better financial habits than their parents had at the same age. Lots of “boomerang kids” moved back in with their parents after college, for example, earning derision from the hearty pioneers of earlier generations. But moneywise, that may have been shrewd. “Living with parents was a way of saving money,” says Nicholas Klisht, a 32-year-old business-development executive who lives in London, Ontario, not far from Toronto. “It helped people pursuing entrepreneurial ventures or trying to start something they cared about.”
A recent Gallup poll found that out of four age groups, 18-to-29-year-olds are most interested in saving their money and least interested in spending it; 10 years ago, the same age group showed the opposite inclinations. And a recent Bankrate survey found millennials to be the most financially comfortable of three age groups. They earn less and have lower net worth than older workers, which is natural, but they seem to be the most optimistic about their circumstances improving.
As with every age group, some millennials are unprepared for a hypercompetitive digital economy– especially those who lack a college education or the right set of skills. But for now, the scariest economic threats may face baby boomers, many of whom haven’t saved enough for retirement, and the Generations Xers right behind them who have been displaced from their careers with little to fall back on. Their future prospects depend to some extent on whether their kids and grandkids can do better. More and more, the younger generation seems up to the task.
Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.