Labor Market Conundrum: Number Of Millennials Living At Home With Mom Continues To Surge

Nary a day goes by that President Trump and/or the talking heads on CNBC fail to mention the following unemployment chart as evidence that "everything is awesome" with the U.S. economy...

...which might be true unless you"re among the 95 million-ish Americans who have been looking for a job for so long that you no longer even count as a human being to the Bureau of Labor Statistics...

...or if you"re a millennial.

Despite being the most educated generation ever to walk the face of the

planet, at least according to their tuition bills paid by mom and dad, a

staggering number of millennials still can"t seem to land a steady job.  Moreover, despite the steadily improving labor market, as the USA Today points out, the outlook for millennials continues to inexplicably deteriorate with 20% of 26-34 year olds currently living at home with mom versus only 17% back in 2012.

The share of older Millennials living with relatives is still rising, underscoring the lingering obstacles faced by Americans who entered the workforce during and after the Great Recession.

 

About 20% of adults age 26 to 34 are living with parents or other family members, a figure that has climbed steadily the past decade and is up from 17% in 2012, according to an analysis of Census Bureau data by Trulia, a real estate research firm. The increase defies record job openings and a 4.1% unemployment rate, the lowest in 17 years.

 

Not surprisingly, a much larger portion of younger Millennials age 18 to 25 (59.8%) live with relatives, but that figure generally has fallen the past few years after peaking at 61.1% in 2012.

So why does the professional development of millennials continue to diverge from other generations?  While one can never be sure, perhaps the answer to that question lies in the personal experience of young Heidi Toth who decided to quit her job, after gaining just two years of experience, to join a church mission for nearly two years.  Then, after returning to work from her travels, Toth quit again in 2013 after a "series of layoffs modified her duties"...which we assume roughly translates to..."a bunch of people got fired which meant I had to work harder so I quit."

After graduating from Texas Tech University with a journalism major in 2005, Heidi Toth, now 35, got a job quickly at a Provo, Utah, newspaper. But in early 2007, she went on an 18-month church mission, landing her back in the job market in the depths of the recession in 2008. Unable to find work, she moved in with her mother in Roswell, New Mexico, for nine months while she hunted for work and took part-time, low-paying jobs.

 

She was rehired at the Provo paper in spring 2009 but left again in 2013 after a series of layoffs modified her duties. After months of fruitless job searching and traveling, she returned to her mother’s house for three months until she was hired at a Lubbock, Texas, paper.

 

Toth was grateful she could live rent-free during her periods of unemployment. But, she adds, “It wasn’t ideal, professionally or personally.”

 

Prospective employers in larger, distant cities didn’t think she would be readily available for interviews. And at home, “I felt like I was back in high school,” she says. “I felt like I had to ask permission to go out.”

Meanwhile, as the Pew Research Center recently noted, even the Millenials that manage to hold a job and establish their own residence aren"t much better off as they now head more households living below the poverty line than any other generation and, in aggregate, represent nearly one-third of all impoverished households in the United States. 

More Millennial households are in poverty than households headed by any other generation. In 2016, an estimated 5.3 million of the nearly 17 million U.S. households living in poverty were headed by a Millennial, compared with 4.2 million headed by a Gen Xer and 5.0 million headed by a Baby Boomer. The relatively high number of Millennial households in poverty partly reflects the fact that the poverty rate among households headed by a young adult has been rising over the past half century while dramatically declining among households headed by those 65 and older.

 

Of course, that"s all despite the fact that they only head just over 20% of all households...

Millennials are the largest living generation by population size (79.8 million in 2016), but they trail Baby Boomers and Generation Xers when it comes to the number of households they head. Many Millennials still live under their parents’ roof or are in a college dorm or some other shared living situation. As of 2016, Millennials (ages 18 to 35 in 2016) headed only 28 million households, many fewer than were headed by Generation X (ages 36 to 51 in 2016) or Baby Boomers (ages 52 to 70).

 

Of course, those aren"t the only stats that prove just how much those anthropology degrees are paying off...Millennials are also winning at the "cohabiting-couple" game...presumably because it takes a village of millennials to cover one monthly rent bill.

Conclusion:

Why Credit Suisse Thinks Millennials Are The "Unluckiest" Generation

As part of the annual Credit Suisse Global Wealth Report, which as discussed earlier found that for the first time ever, the "Top 1%" owns a majority, or 50.1%, of the world"s wealth...

... the millionaire bankers behind the firm"s (Ultra) High Net Worth client division decided to also shed some tears for the world"s Millennials, whom they dubbed with one word: "unlucky"... a term which members of said generation will likely wear as a badge of honor (if only to justify their plight in life), while other generations will be eager to promptly mock.

While both sides have valid justifications for their perspective, here is why the Swiss bank has almost given up on an entire generation as a potential client:

"The “Millennials” – people who came of age after the turn of the century – have had a run of bad luck, most clearly in developed markets. Capital losses in the global financial crisis of 2008-2009 and high subsequent  unemployment have dealt serious blows to young workers and savers. Add rising student debt in several developed countries, tighter mortgage rules after 2008, higher house prices, increased income inequality, less access to pensions and lower income mobility and you have a “perfect storm” holding back wealth accumulation by the Millennials in many countries."

In a contrast that is sure to generate controversy, Credit Suisse compares the plight of the "unlucky" Millennials to the "good fortune experienced by the baby boomers, born in large numbers between 1945 and 1964, whose wealth was boosted by a range of factors including large windfalls due to property and share price increases." Additionally, CS notes that the millennial cohort is smaller as a percentage of the total adult population than the baby boomers were at the same age, and notes that while "normally it is good to belong to a smaller cohort" this time that appears not to be the case, and nowhere more so than in the United States.

So why aren"t Millennials a lucky cohort? Did the financial crisis and its fallout just swamp the advantage of being in a small cohort? Or is there more to it? Here are several key reasons cited by Credit Suisse to make its high net worth clients feel some compassion for America"s young adults.

Assets and debts of the Millennials

Table 1 provides a breakdown by age for various wealth characteristics in key developed markets.  The table shows that income and wealth both generally increase with age – certainly for the average individual, but also usually in cross-section data.

The share of financial assets also rises once young millennial adults have left the parental nest. Non-financial assets – of which owner-occupied homes are the most important – decline in importance with age. For many people, the first priority is to buy a house, with financial assets being built up later. This pattern helps to explain why the high and rising house prices seen in many countries since the year 2000 have been a special problem for the Millennials. According to the IMF, state pensions in advanced economies are expected to replace just 20% of per capita income by 2060, compared with 35% today. Also, fewer workers are now covered by employer-based pensions than in the past, and defined benefit pensions are declining fast. For example, only 10% of UK workers in the private sector born in the 1980s have a defined benefit pension plan, compared to 40% of those born in the 1960s at the same age. So it is increasingly important for people to save for retirement on their own account. The share of financial assets in total assets will need to rise in most countries in the future compared to what is seen in Table 1. This is especially true for the Millennials, who will likely face the added challenge of higher contributions and taxes required to fund state pensions and other benefits for the baby boom cohort in their retirement.

Student loans have been an increasingly important component of debt in a number of countries. The trend is particularly striking in the United States and is also evident in Germany (see Figures 2a and 2b, which use the same data sources and age groups as Table 1). In the United States, 37% of those aged 20–29 in 2013 had some student debt, which accounted for 18% of the total debt of that age group. In Germany, 12% of those in the same age group had student debt and it accounted for about 6% of total debt.

The rise in student debt is partly due to higher fees. But it also reflects the fact that the Millennials are more educated than preceding cohorts. For instance, the percentage of 25–34 year olds with tertiary education in OECD (Organisation for Economic Cooperation and Development) countries rose from about 15% in 1970 to 26% in 2000 and 43% in 2016. This greater educational attainment may help to ease the Millennials labor market diffuclties. However, although average rates of return to college and university have held up fairly well, this is largely because lower wages for less-educated workers have reduced the opportunity cost of tertiary education. But for the most university-educated Millennials the outcome may be job opportunities and wages no better than those of their parents, achieved by a dint of more costly education.

Entrepreneurship

It is sometimes claimed that Millennials are starting more businesses than earlier generations, and doing it at younger ages. But the official statistics suggest otherwise: only 2% of Millennials in the United States are self- employed, versus 8% of Generation Xers (those born between 1965 and 1980) and baby boomers. And entrepreneurship, as measured by the fraction of self-employed workers, has been declining in most OECD countries since the turn of the century. The OECD self-employment rate fell from 17.6% in 2001 to 15.8% in 2011; in the United States it dropped from 7.4% in 2001 to 6.5% in 2015. Sagging entrepreneurship in most countries is consistent with relatively few Millennials starting a business in this period.

The apparent decline in entrepreneurship among Millennials relative to their predecessors seen in the official statistics may reflect the fact that the cohorts being compared are observed at the same point in time, not at the same age. More Millennials will start businesses as they age. Another explanation is that those Millennials who have become entrepreneurs have each created more businesses than their counterparts in earlier cohorts. This may reflect their ”tech savvy” and the greater ease of starting multiple businesses these days with the help of the internet. A third factor is that although many Millennials would like to start a business, for a time they were restrained by  tough economic conditions. This suggests a surge in millennial entrepreneurship may occur soon or may already be taking place, as has been seen in some emerging markets, such as China and India.

Comparing cohorts

Figure 4 shows wealth components for US adults aged 20–29 and 30–39 in 1992, 1998, 2007 and 2013. Total assets increased markedly for the 20– 29 year-old group between 1998 and 2007, due mostly to an increase in real assets caused by rising house prices. Real assets for 30–39 year olds also increased rapidly at that time, but mean financial assets fell in this age range, perhaps reflecting re-allocation of portfolios in response to the changing returns from real and financial assets. Things went into reverse between 2007 and 2013: real assets declined substantially for both groups and financial assets increased a little. Debt rose strongly for both groups between 1998 and 2007, but has since returned to its 1992 level. These comparisons tell us about the experience of Generation X and the Millennials in their early adulthood. Generation X was still in its late 20s and 30s when house prices rocketed in the United States prior to the global financial crisis, and during the crisis itself. So it, as well as the first wave of Millennials, had a wild roller coaster ride. They experienced not only the effects of the general rise and fall of economic activity, but also the impacts of wild swings in asset prices. Both aspects are reflects in the wealth changes seen in Figure 4, which simply shows that young Americans aren"t getting wealthier any more.

General Indebtedness

Figure 6 shows US age-debt ratio profiles. For each cohort aged 40 or more in 2017, the debt to income ratio was higher than that of previous cohorts at all ages. The “crossing over”observed for wealth in Figure 5 is not seen reflecting the fact that debts do not fall in value when houses and shares crash, as they did during the financial crisis. But, perhaps most interestingly, the pattern is interrupted for the Millennials. The debt to income ratio started out higher than earlier cohorts for those aged 35-39 in 2017 and also rose (briefly, in 2010) above earlier cohorts for those aged 30–34 in 2017. But then there was a crossing-over in 2013 for both of these cohorts, with their debt to income ratios declining below previous cohorts. This hints that the Millennials became more cautious about debt than their predecessors due to the shock of the housing bust in the United States and the global crisis.

Student Debt

Student debt has leapt up for the most recent cohorts in the United States (Figure 7). The biggest increase came for the cohort aged 35–39 in 2017 – i.e. the “leading edge” of the Millennials – but those aged 30–34 in 2017 saw a further increase. As noted earlier, as a consequence, student debt now forms a substantial portion of total debt for young people in the United States.

Living in their parents" basement

The percentage of adults living in owner-occupied housing shows much more stability over cohorts (Figure 8). The oldest cohorts follow almost exactly the same path, but for those aged 40–49 or 35–39 in 2017, there was a higher initial fraction of home owners in successive cohorts. The financial crisis resulted in crossing-over once again, and by 2013 these cohorts slipped below previous cohorts with regard to the fraction of homeowners. 

Inequality and mobility

Millennials have been affected by the general rise in income inequality in advanced economies over recent decades. In a world with constant mean income, constant inequality and no mobility, parents and children would be equally well off. If – more likely – mean income is rising, and there is some mobility, but inequality is constant, then most children will be better off than their parents. But income inequality has been rising in the United States since the mid-1970s, and while mean income has also risen considerably, median income has not increased much. Mobility has also gone down. Similar trends have been seen in other “anglo” countries (with some notable differences, of course). The net result is that past expectations no longer apply. For example, 90% of children in the United States born in 1940 had earnings greater than their parents’, but this ratio had fallen to 50% for children born in the 1980s. About 70% of this decline was due to the rise in inequality.

Interest Rates and Rates of Return

The financial prospects of a cohort are affected by the rates of return they receive on investments and by the interest rates they face. Throughout the world, equity returns were high in both nominal and real terms during the 1980s and 1990s, providing favorable investment opportunities to baby boomers in the first half of their working lives, and also to young members of Generation X. In the first dedcade of the new century, however, both real and nominal returns collapsed, creating quite a different investment environment for the Millennials. After 2010, returns rebounded, but not to the level seen in the 1980s and 1990s. The interest rate story is similar to that for  equity returns, but the decline in real rates began earlier, in the 1990s. Although they rebounded slightly in Europe after 2000, the decline was steady in the United States. This is significant because workers trying to acquire assets increasingly have to switch to riskier investments to get a reasonable rate of return. Real lending rates, which are also important for young people, via mortgages for example, have declined over time as well, but more slowly than deposit rates. In the United States, lending rates reached quite a low level after 2010, but in Europe they remained at 3.8%, far above the real deposit rate of 0.4%. Hence safe saving opportunities have deteriorated for young people, while borrowing has not become correspondingly cheaper.

* * *

Finally, Credit Suisse"s conclusion:

The Millennials have not been a lucky cohort so far. They faced the rigors of the financial crisis and the high unemployment that followed in many countries, and have also been widely hammered by high and rising house prices, rising student debt and increasing inequality. Their pension outlook is also worse than that of preceding cohorts. Some of the Millennials have prospered in spite of these difficulties, as reflected in the more positive picture we see in China and a range of other emerging markets, and the recent upsurge in the number of Forbes billionaires below the age of 40. Some have had substantial family help in paying for education and buying homes, and some stand to inherit from wealthy boomer parents in the future. But there are many Millennials who have not been so fortunate. As a result, the Millennials are not only likely to experience greater challenges in  building their wealth over time, but also greater wealth inequality than previous generations.

And some parting words of comfort: Millennials" may or may not be unlucky, but all they have to do is lat a few years, and slowly but surely their wealth should start to grow....

... Unless, of course, the entire social-economic matrix has been corrupted by a decade of central planning and there truly is no hope for America"s young adults. In which case, if you need directions to the Marriner Eccles building to protest your fate to the appropriate authorities, we are glad to provide.

Oh, and for those Millennials who hoped to become the next ultra wealthy clients of Credit Suisse" high net worth group... our condolences, but we hear HSBC will take anyone these days.

Millennials Head One-Third Of All Poverty-Stricken U.S. Households (The Rest Live With Mom)

Millennials just can"t catch a break.  Despite being the most educated generation ever to walk the face of the planet, at least according to their tuition bills paid by mom and dad, a staggering number of them now head households living below the poverty line...and that excludes the ones forced to live at home with mom and dad.

According to a recent note published by the Pew Research Center, Millenials now head more households living below the poverty line than any other generation and, in aggregate, represent nearly one-third of all impoverished households in the United States. 

More Millennial households are in poverty than households headed by any other generation. In 2016, an estimated 5.3 million of the nearly 17 million U.S. households living in poverty were headed by a Millennial, compared with 4.2 million headed by a Gen Xer and 5.0 million headed by a Baby Boomer. The relatively high number of Millennial households in poverty partly reflects the fact that the poverty rate among households headed by a young adult has been rising over the past half century while dramatically declining among households headed by those 65 and older.

Of course, that"s all despite the fact that they only head just over 20% of all households...

Millennials are the largest living generation by population size (79.8 million in 2016), but they trail Baby Boomers and Generation Xers when it comes to the number of households they head. Many Millennials still live under their parents’ roof or are in a college dorm or some other shared living situation. As of 2016, Millennials (ages 18 to 35 in 2016) headed only 28 million households, many fewer than were headed by Generation X (ages 36 to 51 in 2016) or Baby Boomers (ages 52 to 70).

Of course, those aren"t the only stats that prove just how much those anthropology degrees are paying off...Millennials are also winning at the "cohabiting-couple" game...presumably because it takes a village of millennials to cover one monthly rent bill.

Meanwhile, for the first time in history, more young adults today are living at home with mom and dad than with a spouse.

Conclusion:

These Are The States Where $1 Million Lasts The Longest

If you had a million dollars, would you retire?

For most Americans, the answer to that question would be no. Which is especially problematic for millennials, who, having been permanently scarred by the financial crisis, are investing at lower rates than members of Generation X or the Baby Boomers, making it more difficult for them to build wealth. Furthermore, the generation that now comprises the largest share of working Americans is having trouble saving money, thanks in no small part to their $1.3 trillion in student debt.

Their present financial predicaments suggest that millennials probably won’t retire in the large numbers that members of their parents’ generation will, primarily out of necessity. Even for some baby boomers, perennially low interest rates since the crisis – and possibly from here on out – have made things more difficult for conservative savers who may now need to redo their longstanding retirement plans to make do with less.

For workers in this situation, choosing a location where they can stretch their money the furthest in retirement is paramount. Enter a new study by GoBankingRates that measures how long $1 million will last in different locations around the country.

“A new report from GOBankingRates measures how long a million dollars would last for retirees 65 and older, state by state. It did that by multiplying the Bureau of Labor Statistics’ mean annual expenditures for that age group by a cost-of-living measure for each state, provided by the Missouri Economic Research and Information Center. The tally separated out annual spending on health care, housing, groceries, transportation, and utilities.”

The upshot is unsurprising: Retirees hoping to squeeze the maximum value from their dollars should head down south:

In Mississippi, retirees can stretch a million dollars for more than 26 years – the longest of any US state, according to the study. Arkansas, Michigan, Tennessee, Georgia, Missouri, Texas, Indiana and Alaska are also states where a million dollars can last for longer than 24 years.

The state where $1 million will be consumed most quickly is, unsurprisingly, California.  

According to Bloomberg, the study’s figures are conservative.

“These are conservative figures. They don’t factor in any entertainment or travel, which would make for a pretty grim retirement. Nor do they take into account how inflation might cut into purchasing power as we age. Inflation can take a bigger bite for seniors, because medical costs, which may account for a bigger chunk of expenses, have an inflation rate significantly higher than that for the broad economy.”

And while health-care costs are projected to rise, the study also doesn’t factor in any investment returns on the $1 million.

“Health-care costs for retirees will rise at an average annual rate of 5.5 percent over the next decade, according to HealthView Services, which makes retirement health-care cost projection software. To put that in perspective, from 2012 to 2016, the average annual broad inflation rate in the U.S. was 1.9 percent."

Of course, to many young people, one day having $1 million in assets seems like an impossible dream. One recent study suggested that 70% of millennials have less than $1000 in savings. But this is just one more reason why they should start thinking about retirement now.
 

America's Fertility Rate Falls To Record Low

The US isn"t yet grappling with the economic disaster that is a shrinking popuation - unlike Japan. Though it"s starting to look like a not-too-distant possibility. US birthrates fell to yet another historic low in 2016 as a whirlwind of economic and cultural factors inspire more women to delay, or forgo, having children. According to provisional data for the fourth quarter provided by the CDC, the US birthrate has declined to 62 births per 1000 women – its lowest level on record, and down from 62.5 in 2015.

This is especially troubling because demographers worry that a dwindling birth rate will hurt economic growth and tax revenues needed to fund transfer payments to a growing elderly population, as more members of the baby boomer generation age into retire.

The CDC did not say why the birth rate is declining. But according to Axios, research and surveys have shown several reasons, including wider availability of birth control, personal economic instability from student loans or other debt, women focused on launching a career before starting a family, and a growing acceptance that not everyone wants to have children.

If the Trump administration achieves higher economic growth, it’s unlikely to do so fast enough to support the mandated 9% increase in entitlement spending for older Americans without more deficit spending. Trump says he intends to preserve Social Security and Medicare spending levels.

The highest birthrates are now seen among women aged 30-34. Previously, the highest rate had been for women aged 25-29, which fell to 101.9 in 2016.

Chart courtesy of Axios

Furthermore, as Statista notes, teenage pregnancy is in continual decline in the United States. As preliminary data released in a newreport by the National Centre for Health Statistics on Friday reveals, the birth rate of mothers in the 15-19 age group dropped to a record low of 20.3, amounting to 209,480 births in 2016. Compared to 2015, this is a decrease of almost 9% and even 62% when compared to 1996.

Conversely, birth rates of women aged 40-44 are on the rise: While it stood at 6.8 in 1996, the provisional birth rate for this age group is 11.4 births per 1,000 women in 2016, which accounts for an increase of 4% compared to the previous year.

You will find more statistics at Statista

Here are a few other interesting data points from the CDC, courtesy of Axios:

• The CDC estimates the fertility rate in 1960 was about 118 births per 1,000 women, or almost double what it is today.


• Despite the record low birth rate, more than 3.94 million babies were born in 2016, which was about 37,000 fewer than 2015.


• The highest birth rate is now among women aged 30-34 at 102.6 births per 1,000 women. Previously, the highest rate had been for women aged 25-29, which fell to 101.9 in 2016.


• U.S. births by race origin of the mother: 52% white, 23% Hispanic, 14% black, 6% Asian, 1% Native American/native of Alaska, Hawaii or Pacific Islands.

* * *

Economists worry that if birthrates continue to decline, America’s economy will enter a period of stagnant growth like that experienced by Japan over the past two decades. As we reported last year, the problem of falling fertility in Japan, which at 1.4 births per woman, has one of the lowest fertility rate in the developed world, is so severe, that Japan"s lawmakers have decided to take action.  Late last year, Japan’ cabinet approved a record $830 billion spending budget for fiscal 2017, which includes child-rearing support. However, the birth rate in the US remains positive, while Japan"s population is shrinking.

However, at this rate, the local population may not need the free money in the not too distant future. The only hope, as in the case of many European nations, is that a surge in immigration will offset the natural decline of the domestic population, whose average age has never been higher...

Will Millennials Ever Become A Generation Of Homeowners: BofA Has A Troubling Answer

America"s biggest as of 2016 generation, the Millennials, has a heavy burden on its collective 150 million shoulders: its task is to not only step in as a buyer of stocks once the baby boomers begin selling in bulk, but to also provide the much needed support pillar for the recovery of the US housing market. In fact, there have been countless "bullish" housing market theories built upon the premise that sooner or later tens of millions of young American adults will emerge from their parents" basements, start a household, and buy a house.

So far that theory has not been validated. One simple reason is that Millennials simply can"t afford to buy a house. As we reported last week, a study from Apartment List showed that nearly 70% of young American adults, those aged 18 to 34 years old, said they have saved less than $1,000 for a down payment. This is similar to what a recent GoBanking Survey found last year, according to which 72% of "young millennials"- those between 18 and 24 years old - had $1,000 in their savings accounts and 31% have $0; a sliver (8%) have over $10,000 saved. Of the "older millennials", those between 25 and 34, 67% had less than $1,000 in their savings accounts, 33% have nothing at all, and 15% had over $10,000.

So does that mean that Millennials can simply be written off as a potential generation of homeowners, and if so, what are the implications for the broader housing market?

That"s the question BofA economist Michelle Meyer asked on Friday, although she phrased it in the proper context: "Is it [still] cool to buy a home."

To our surprise, Meyer found that while the homeownership rate among young adults has plunged to a record low, helping to explain the slow recovery in single family homebuilding, and confirming empirical observations that Millennials have largely been a "renter" generation, by Bank of America"s calculations, the Millennial generation can afford to buy a home - at least in terms of making the monthly payments. While we - and many others would dispute that - BofA does make some other interesting observations, namely that lifestyle changes, including delayed marriage and childrearing, have led to fewer homeowners and a tendency to live close to city centers. Well, if it"s not money it"s clearly something else. Let"s dig in.

First, here is BofA on a rather trivial, if critical topic: "the importance of the youth"

In order to understand the future of the housing stock, it helps to get a grasp on the growth in population, which is a function of immigration and the rate of births/deaths. The Census Bureau is projecting population growth of 0.8% annually over the next decade and 0.7%, on average, through 2036, showing continued slowing from the 0.9% average last decade. Perhaps even more important, however, is the age composition, with a particular focus on young adults who are the drivers of household formation. There are currently 75 million individuals considered to be Millennials, making up the largest generation. The average age is 27.5, implying that there is a large cohort of young adults coming to age (Chart 1). In theory, this should underpin growth in homeownership. But, it is complicated - we have to understand the ability of Millennials to afford housing and the desire to become homeowners vs. renters.

Can they afford to buy?

The first question to ask is whether the younger generation can afford to buy a home. We turn to the National Association of Realtors (NAR) affordability index which is a ratio between median family income and the qualifying income for a mortgage as a function of median existing single-family home prices and mortgage rates. According to this measure, homeownership is still very affordable relative to history. What about for young adults? Following the NAR"s methodology, we compute an affordability measure for the 25-34 year old age cohort using median household income data from the Census Bureau. Our computed index only goes to 2015 given data limitations, but we extrapolate forward (Chart 2). We find that housing is still affordable for young adults, although not to the extent it is for the overall population. The gap in affordability between the overall population and young adults has widened over the years. That said, the affordability index for young adults is still above the historical average for the aggregate, implying that housing is generally affordable.

So what seems to be the problem? One obstacle is being able to make the downpayment. The NAR measure assumes a 20% down payment, which is a high hurdle for young adults- remember that the bulk of the current 25-34 year old cohort started their careers during the financial crisis and early stages of the recovery, when the economy and labor market were fragile. Plugging in a lower down payment of 10% and the situation looks worse due to increased principal and interest payments. With a 10% downpayment, the index would be at 125.2 in 2015, which is 11% lower than the standard 25-34 year old index and 25% lower than the broad NAR index.

Another challenge is the ability to take on a mortgage loan given high student debt. According to the NY Fed"s credit panel, total outstanding student debt has reached $1.3 trillion, a substantial increase from the $260bn level in 2004. According to the NAR"s Generational Report, nearly 50% of homebuyers under the age of 36 noted that student debt delayed their home purchase, making it harder to afford the downpayment. And, of course, there is the challenge from tighter credit standards which has made it more difficult to achieve homeownership.

But do they want to buy?

Addressing whether Millennials can afford to buy is only one part of the story. We need to understand if they actually want to buy. The homeownership rate has tumbled at a faster rate for 25-34 year olds than for other generations which we do not think can be explained by affordability metrics (Chart 3). We think it also owes to lifestyle changes. Maybe there is something to the stories about Millennials preferring to spend money on avocado toast instead of their home?

The shopping cart of young adults

Using data from the Consumer Expenditure Survey, we can look at the evolution of the consumer basket over time for those aged 24-35 (Table 1). Relative to the peak of the housing bubble in 2004, there has been a decline in the share of dollars spent on owned shelter and an increase in spending on renting. It also seems that this age group is spending more on healthcare and household operations, which include services paid to keep their household running efficiently (think cleaning). This has come at the expense of spending on apparel, transportation and groceries. The young adult in 2004 has a difference shopping cart than one today.

The single life

The change in spending patterns could reflect the fact that young adults are not only less likely to be homeowners, but they are less likely to be married or even live independently. Instead, this age group is living with parents or other relatives more than in the past (Chart 4). This adjustment in living arrangements has been ongoing for years but the Great Recession seemed to have speed up the trend. Today only 55% of those aged 25-34 live with a spouse/partner compared to over 80% in 1967. Life events such as getting married or having children are typical triggers to buying a home. The longer this age group lives with parents or independently, the more homeownership will be delayed.

City slickers

We have also seen a shift toward urban centers and away from rural areas over the years. This goes hand-in-hand with a decline in homeownership for young adults. Interestingly the share of young adults living in the suburbs has been fairly steady at around 41% (Chart 5). Moreover, it appears that there is a flocking toward the major cities, specifically in the city centers which are close to transit, workplaces and restaurants. City centers typically have more rental properties than the suburbs. But we also see greater home sales close to city centers than in the past. According to BuildZoom, new home sales within 5 miles of the centers of the 10 most densely cities have exceeded 2000 levels but if you go another 10 miles out, sales are about 50% below 2000 levels.

There are both cyclical and secular forces behind the drop in the homeownership rate for young adults. While young adults can generally afford housing, there are other constraints including the ability to make a large enough downpayment and tighter credit standards. Lifestyle changes are partly to blame.

BofA" troubling conclusion: "These dynamics won"t change in the medium-term which should translate to a lower equilibrium pace for single family housing starts."

Millennials Choose To Spend Money On Travel, Dining, And Fitness Than Save For Retirement: Survey

Submitted by Nicholas Colas of Convergex

Millennials save more of their income than older generations. Don’t believe it? Look at a recent survey by Merrill Edge, which found millennials say they save 36% more than their general population counterparts report as over a third stash away more than 20% of their salary per year.

As for what they’re saving for, that’s another story. Whereas baby boomers save for retirement, millennials want financial freedom and save for a desired lifestyle rather than exiting the workforce. Millennials would rather spend money on travel, dining, and fitness than save for their financial future. They are also more focused on certain milestones like landing their dream job or traveling the world, and are less worried about getting married or having kids. Bottom line, millennials are saving, just for shorter-term goals as compared to their parents.

Where were you thirty years ago? My parents and many of our readers likely remember the stock market’s ascension to record highs before the sudden crash of 1987. A few decades later the capital market is back to flirting with another peak, but the loss-averse nature of people leaves past financial crises clearly imprinted into memory.

The Atlantic put together 41 pictures for a glimpse into 1987 that captured a wide variety of figures and events during that year. One such portrait included passengers on the F train in New York reading the newspaper after “Black Monday.” The front cover of the New York Post read “Wall St. Bloodbath” in huge bold letters and “Panic selling sweeps market: P.5” at the bottom of the page. Six clocks sat between the two texts, reflecting the event’s global reach.

Here are some other descriptions of pictures from that time to highlight just how different our world is three decades on:

• Now-President-but-then-private-citizen Donald Trump greets Liza Minelli backstage at Carnegie Hall, along with his then wife Ivana Trump, and Henry and Nancy Kissinger. Fast forward 30 years (almost to the month) and likely much to his disbelief at that time he’s currently representing the free world by traveling abroad and meeting with foreign leaders. Far cry from real estate deals, that.


• The vice president of marketing for Compaq Computer Corporation shows off the new Compaq Portable III at the Mark Hellinger Theater in New York, which weighs just 18 pounds so that it’s easy (!) to carry. Now not only our computer but phone capabilities rest in just one device and fit right in our pockets, with the iPhone 7 weighing as light as between 5 to 7 ounces.


• Then First Lady Nancy Reagan watches an anti-drug musical, Just Say No, at a high school in Alexandria, Virginia. Tough to imagine now about two-thirds of Americans live in a state where some form of marijuana is legal. The momentum continues in that direction as well, with 60% of Americans favoring legalization of the drug according to a 2016 Gallup poll.


• About 200,000 people (according to US Park Police estimates) rally on the National Mall in support of gays and lesbians. Fast forward and we now have marriage equality.


• Bernie Sanders, then Mayor of Burlington, Vermont, records songs and a conversation about his philosophy on tape: “Sanders feels music is a powerful way to communicate with the masses.” Little did people see just how much he would connect with the masses this past presidential election, particularly among the politically hard to reach millennial cohort.


• For more photographs down memory lane, here’s a link to the article with everyone from David Bowie and Princess Diana to Pee-wee Herman and Howard Stern:

Thirty years ago, baby boomers were in their twenties and up, and now their kids’ ages span from nearly twenty to their mid-thirties. As those old photographs show, however, millennials’ experience in their twenties and thirties vastly differs from their parents socially, culturally, and economically. We therefore have different values and goals, which even extends to our financial lives.

A recent survey of over 1,000 Americans conducted from March 21st to April 5th by Merrill Edge showed a stark generational divide about different groups’ life priorities. Some of these findings may come as a surprise. Here are the results:

• Top life priorities: “millennials are the first generation to plan long-term for financial freedom instead of retirement.” Most (63%) millennials are “looking to save a set amount of money or income necessary to enjoy their desired lifestyle, compared to the majority (55%) of Gen Xers and baby boomers who are saving so they can leave the workforce.” Millennials are “significantly more likely than their older counterparts to focus on personal milestones of working at their dream job (42%, compared to 23%) and traveling the world (37%, compared to 21%).”
  
  • Additionally, “today’s 18- to 34-year-olds are also far less likely to emphasize the traditional family milestones of getting married (43%, compared to 51%) and being a parent (36%, compared to 59%).”
  
  


• Spending patterns: most millennials are more likely to spend money on “travel (81%), dining (65%) and fitness (55%) than save for their financial future.” The report attributes this to FOMO, or the “fear of missing out”.


• Savings: millennials “say they save 36% more than their generational counterparts, with more than one-third (36%) setting aside more than 20% of their salary per year.” As for overall respondents, 42% are saving less than 10% of their salary, while 7% don’t save anything.
  
  • Ironic given that Americans think the “Greatest Generation (54%) does a ‘very good’ job of saving, followed by baby boomers (45%), Gen Xers (19%) and millennials (8%).” In fact, just 15% of millennials think of themselves as good savers. So even though 45% of millennials consult their parents “always” or “often” for financial advice and think they’re better savers, it’s the opposite.
  
  


• Consequently, Americans aren’t saving enough and feel unprepared for uncertain scenarios. Most Americans “are not very confident they would be able to achieve their financial goals if they were to: get a divorce (71%), have children (64%), live to 100 years old (62%) or outlive their significant other (48%).” The problem, they are not “financially planning for these scenarios either, with only 5% saving for the possibility of divorce and 23% for the possibility of children.”
  
  • Therefore, 59% of respondents think Americans should be required to save for their own retirement, and 48% believe financial education should be required.
  
  


• Technology: Two in five Americans report “using an online or mobile portal to manage their investments.” Respondents also say using these platforms “has a positive impact that makes users feel more knowledgeable (51%), empowered (31%) and savvy (14%).” Going forward over the next decade, Americans “believe emerging technologies will allow more people to invest (41%)” and that a “majority of investments will become automated (34%), the 401(k) account will no longer be the ‘gold standard’ (29%), and the market will be dominated by women (13%).”


• As for robo advisors, one in eight (13%) Americans currently use one or would consider it in the next year. Zeroing in on millennials, however, brings this figure up to 22%.


• Link to the full report.

The upshot: whereas baby boomers save for retirement, millennials want financial freedom and save for their desired lifestyle rather than seeking to exit the workforce. Americans may view older generations as better savers, but millennials actually take the cake there. They just have different priorities that are shorter-term than their parents. Of course this could pose risks for millennials when they finally grow to their parents’ age and beyond, but this survey shows a clear way for financial professionals to best reach them: on mobile where they already give most of their attention, and addressing their unique take on life goals.

70% Of Millennials Have Less Than $1,000 Saved For Buying A House

One of the frequent reasons cited for the failure of the US housing sector to rebound to its pre-recession levels, is the lack of household formation among young American adults and specifically the unwillingness, or inability, of Millennials, which last year overtook Baby Boomers as America"s largest generation...

... to move out of their parents" basement, or stop renting, and purchase their own home. Now, a new study from Apartment List confirms the underlying problem: nearly 70% of young American adults, those aged 18 to 34 years old, said they have saved less than $1,000 for a down payment. This is similar to what a recent GoBanking Survey found last year, according to which 72% of "young millennials"- those between 18 and 24 years old - had $1,000 in their savings accounts and 31% have $0; a sliver (8%) have over $10,000 saved. Of the "older millennials", those between 25 and 34, 67% had less than $1,000 in their savings accounts, 33% have nothing at all, and 15% have over $10,000.

As the WSJ frames it, with most millennials having saved virtually nothing for a down payment on a home "many will face steep obstacles to homeownership in the years ahead." It also means that the US housing market, traditionally the bedrock of middle-class American wealth, may never recover to levels seen during the prior economic cycle which incidentally peaked as the housing bubble burst, scarring an entire generation with the vivid memories of what happens when millions of Americans rush to overpay for homes.

Which is not to say that US housing is languishing, on the contrary. As we showed earlier this week, in the first quarter of 2017, the number of California homes that sold for $1 million or more totaled 10,562 up 11.7% year over year and the highest on record for a first quarter.

However, while the 1% (or even 10%) of America"s wealthiest buy and sell trophy real estate among each other (or to Chinese oligarchs) with impunity, creating another bubble in luxury real estate, for the vast majority of America, it"s "middle class", homeownership is becoming an increasingly elusive dream, forcing many to contend with renting indefinitely.

And, going back to the original study, the culprit appears to be the inability, or unwillingness, or America"s youth to save because according to Apartment List, even senior members of the age group are falling short. Nearly 40% of older millennials, those age 25 to 34, who by historical measures should already own or be a few years away from homeownership, said they are saving nothing for a down payment each month.

Here is the punchline: the vast majority—some 80%—of millennials said they eventually plan to buy a home. But 72% said the primary obstacle is that they can’t afford it.

That"s a pretty big obstacle as the study"s creator admitted. “It’s encouraging that millennials do want to buy homes. It suggests that they are delaying forming households but they’re not giving it up,” said Andrew Woo, director of data science and growth at Apartment List. “The biggest reason [they aren’t buying] is because of affordability.”

This is how America"s most troubled generation sees the problem in their own words: Catie Peterson, a 22-year-old graphic designer in Fort Lauderdale, Fla., said she doesn’t expect to start saving for a down payment for another five years or so. “I barely have enough savings to cover my car if it were to break down,” she said. Peterson said she pays $975 a month in rent for a small one-bedroom apartment, which is about one third of her paycheck, leaving little room to save.

“Once I get settled in my career and settled in my family, I think buying a house would be reasonable.” It would, but good luck finding something that is affordable enough for the bank to give you a mortgage.

As for the main reasons cited by Millennials why they are unable to save any money, these should be familiar to regular readers: they include student loan debt, rising rents and the slow starts many got to their careers during the recession. Furthermore, with many living in vibrant urban centers with ready access to restaurants, bars and entertainment might, saving seems less urgent. Furthermore, many are children of the affluent baby boomer generation and some expect their parents to give them a boost when the time comes, i.e., they expect to inherit their parents wealth. In total, some 25% of millennials ages 25 to 34 expect to receive help from friends or family, according to the survey. Still, three-quarters said they expect to receive less than $10,000, which might not be enough to close the gap.

* * *

It was not all bad news: the study found that some young people, if not nearly enough, may be saving more. On average, millennials who make more money save a smaller share of their incomes. Those making less than $24,000 save about 10% of their incomes, for example, while those making more than $72,000 save just 3.5%, according to the survey. Also, more millennials are finding a way to buy homes than a few years ago. First-time buyers have accounted for 42% of buyers this year, up from 38% in 2015 and 31% at the lowest point during the recent housing cycle in 2011, according to Fannie Mae (still, a first-time buyer is anyone who hasn’t owned a home in the past three years, a group that could include older people as well.)

Unfortunately for the generation that represents America"s future, the bad news dominates, and as the WSJ concludes many millennials face daunting odds: "less than 30% of 25- to 34-year-olds can save enough for a 10% down payment in the next three years, while just 15% could save that much within a year, according to the Apartment List survey."

Of course, there is a loophole. As we reported last week, programs are being rolled out to allow first-time buyers to purchase homes with even smaller down payments.  In fact, none other than the bank which had to be bailed out less than a decade ago, Bank of America, recently announced intentions to slash down payments to help Millennials. Speaking to CNBC, BofA CEO Brian Moynihan, the proud owner of Countrywide Financial, said that his mission is to reduce mortgage down payment requirements to 10% for traditional loans.  Per CNBC:

"But, you know, I think at the end of the day is people forget that, at different points in your life and different points on what you"re doing in life requires you to think about housing differently as a place for you and your friends, as a place for you and maybe your significant other, and then ultimately, a place for family. That drives change. And so yes, it"s taken more time. And we talked a lot about this, you know, four or five years ago, that if you require a 20% down payment, it takes just a little more time to accumulate 20% than it would 3% or none, which is what the rules were for a short period of time."

"So our goal, going back to regulatory reform, is should you move the down payment requirement from 20% to 10%? Wouldn"t introduce that much risk."

Of course, as we pointed out last week, we are certain that Moynihan"s sole purpose for wanting to
lower down payments is to help those poor millennials living in mom"s
basement, and has nothing to do with the fact that"s Bank of America (and Wells Fargo) has lost a ton of
fee revenue to government-backed loans that only require a 3% down
payment.

Why not?  Gradually destroying lending standards worked out really well last time around.

But we digress, so here is 33-year-old data analyst Gina Fontana who explained her problem so simply, even a Fed president could get it: she said she has saved a bit for a down payment but doubts she will use it anytime soon because home prices are so far out of reach. She added that she had saved enough for a 10% down payment on a $200,000 house when she was living in Philadelphia, but couldn’t buy anything in the neighborhoods she liked.

Now she has moved to Berkeley, Calif., and said the area’s home prices—where starter homes can go for close to $1 million—make the odds of buying a home essentially zero. “I don’t see that ever happening,” she said. “I just prefer to travel.”

Which is why it is only a matter of time before everyone throws in the towel on the housing recovery, and Goldman launches its first millennial travel-collaterialized securitization product (and its synthetic derivative).

The Baby Boom Tsunami That May Drown The Economy

Submitted by Stock Board Asset Management

In our most recent article Millennials: A Menacing Metamorphosis To The Status Quo breaks down an interview hosted by Gordon T. Long and Charles Hugh Smith. The interview discusses the massive generational shift occurring in the United States as the Millennial generation sets to stitch their beliefs and ideas in the American fabric. But there is an issue. The status quo i.e. the baby boomers are not ready to give up the reigns forcing a generational clash, and as described by Gordon T. Long and Charles Hugh Smith will continue for the next eight years. Such a clash will lead to economic and social consequences. In terms of crisis, Strauss–Howe generational theory provides an excellent blue print of this generational clash called the ‘Fourth Turning’, where the old older is dismantled giving way to the new order.

To continue the theme of generational shifts, we have come across an interesting presentation hosted by Mike Maloney of goldsilver.com called ‘The Baby Boom Tsunami That Is Set To Drown The Economy’. His analysis rhymes with Gordon T. Long and Charles Hugh Smith of a colossal change in demographics that is currently underway in the United States. Maloney outlines how the baby boomer generation is becoming a ‘max social burden’ on an economic basis and in his own language “mandates a stock market crash”. His thesis is simple and it’s all about the structural issues of an aging population becoming less productive and demanding more withdraws from the system.

Like a Tsunami, Maloney outlines in a series of graphs, the rise of the baby boomer generation in the 1950’s, 1960’s, and 1970’s. As the baby boomer generation morphs into the working and max spending period of life this has contributed to the massive stock market and real estate bubbles of the 1990’s and 2000’s. But times are changing as the baby boomers are now transitioning into max savers and ultimately max social burdens in the years of 2020-2030. During this time period, the working age and max spenders in society will have difficulties in supporting the aging population.

In 7 slides, Maloney highlights an actual wave of the baby boomers vibrating throughout time from ‘child’ to ‘max social burden’.

Bonus: Japan seems to be ahead of the curve when it comes to an aging demographics. If Maloney is right about the US could we be turning Japanese? Most importantly, will the SPX500 mimic an early 1990’s Nikkei225 stock index?

What Makes Millennials Disturbingly Different?

Authored by Gordon Long via MATASII,

In stealth fashion millennials are rapidly transforming society.

Something had mysteriously changed during the 2016 US Presidential primaries when an unlikely democratic candidate burst on the national scene with an unquestionable allure for the Millennial generation. How was it that a "left wing" Bernie Sanders, who was of an age that he would be considered as a very old grandfather by this young generation, could draw such rousing support? What was it about this grey haired unknown senator from Vermont who so clearly represented the expectations, aspirations and frustrations of this new "coming of age" generation?

Millennials have silently emerged as a powerful and influential force because of their size and because of how contrasting their beliefs are from versus previous generations including only slightly older Gen-X.

Millennials have surpassed Baby Boomers as the nation’s largest living generation, according to population estimates recently released by the U.S. Census Bureau.  Millennials, defined as those ages 18-34 in 2015, now number 75.4 million, surpassing the 74.9 million Baby Boomers (ages 51-69) and Generation X (ages 35-50 in 2015) is projected to pass the Boomers in population by 2028.

Very importantly, the Millennial generation continues to grow as young immigrants expand its ranks which presently account for over 15% of the total.

 

What Makes Millennials Different?

The Millennial  generation grew up during an era of unprecedented changes and shocks which have profoundly influenced their views and choices:

1. Millennials are older in household formations  when they marry and have children compared to previous generations,


2. Millennials have student debt loads that define and significantly frame this generations financial choices,


3. Millennials are more educated than any previous generation as defined by percentage with undergraduate and post graduate educational attainments,


4. There is a much more foreign born component of the millennial generation at 15%, than any generation going back to the early 1900"s European immigration wave to the US,

1. Family is much more important as a result of changes in parenting since roles such as fatherhood have taken on more involvement, youth event participation and inward family cocooning. A 1997 Gallup survey found that 9 in 10 children (a population comprised entirely of Millennials that year) reported high levels of closeness with their parents and were personally happy with that relationship. Their tight relationship with their parents extends to work, where some companies report establishing relationships with parents of their Millennial employees. The Millennials’ close relationships with their parents might be related to the greater time they spent with their parents growing up. According to Pew (2014), hours spent parenting have increased for both fathers and mothers, tripling for fathers since 1985 and increasing by 60 percent for mothers. These increases have been particularly pronounced among college-educated parents, with college-educated mothers increasing their childcare time since the mid-1990s by over 9 hours per week, while less educated mothers increased their childcare time by only over 4 hours per week.

1. Millennials are much more pronounced to move to Urban centers versus being interested in Suburban living,


2. Millennial are the most technology-centric generation yet, as they came of age in  the era of the internet / smart phones and fully embraced social media to change how they communicate and socialize,


3. Millennials also came of age during developments that deeply shaped their sense and need for security.
   
   • 911 and  the emerging reality of terrorism in the US,
   
   
   • Iraq and Afghanistan Wars where fellow students fought,
   
   
   • School shootings across the nation and the security changes required,
   
   
   • Corporate Downsizing, Right-Sizing and Out-Sourcing which effected their financial security of the family,
   
   


4. The Millennial generation has a much larger sense of "entitlement" since they were often raised and educated with a sense of "you deserve" versus "you earned",
   
   • Millennials believe student loans should be forgiven and is one of the reasons Bernie Sanders was so popular,
   
   
   • Millennials are much more tolerant of others and cultural differences and react strongly to hate speech, threats and racism
   
   


5. Millennials earn 20% less than Baby Boomers did at their age.

All of these differences are now being felt as the Millennial generation becomes an increasingly larger component of the US economy.

Three Major Economic Ramifications:  My Macro Analytics Co-Host Charles Hugh-Smith believes these differences are being witnessed by the following three Economic ramifications:

1.  Urban vs. Suburban Living

The Shift:

• Millennials favor foot-traffic urban shopping/entertainment/dining districts,


• Millennials favor streets with high densities of venues, cafes, brew-pubs, etc. which are safe and close to mass transit,


• These urban districts are expanding in small cities, college towns, etc.


• The experience is as important as pricing: Millennials value convenience and a variety of experiences, not just convenience and price.


• Long commutes and suburban shopping malls are not convenient to Millennials


• Home ownership rates are falling due to the very high cost of urban-core housing,


• By choice or necessity Millennials rent rather than buy,

The Economic Ramification:

• Future Single Residential Housing Requirements may be less and housing prices exposed as Baby Boomers leave their homes for Assisted Living or Nursing Homes.


• Boomer wealth is largely tied up in costly homes--who will buy these houses as Boomers sell to downsize/retire?

2.  Auto and Light Truck Sales

The Shift:

• Millennials favor Uber and Car-sharing over auto ownership.


• Urban living and avoiding longer commutes reduces the need for auto ownership.

The Economic Ramification:

3.  Retail Shopping and Retail Commercial Real Estate

The Shift:

• Millennials favor the convenience of online shopping,


• Millennials do not find value in big suburban malls


• Millennials often work a lot of hours and don"t want to waste time commuting/driving to suburban shopping.


• Hard to beat the easy return policy of Zappos and Amazon or the value of free delivery via Amazon prime,

The Economic Ramification:

• The future of the Mall is likely limited as well as many "brick & mortar" retailers.


• America is the most highly over-stored nation in the world. Excess retailing space is a massive future problem


• Amazon has reached critical mass and as Millennials continue to dominate, online procurement and delivery will continue to accelerate.

Three Major Social Ramifications:  Though it is too certain to know for certain, indications are that there are a number of social ramifications that can be expected as a result of the advent of the Millennial Generation.

1.  Physical and Financial Security

The Shift:

• Millennials place a higher value on physical and financial security as a result of the era they grew up in,

The Social Ramification:

• Millennials will be willing political to sacrifice personal freedoms if it is perceived that it will allow government agencies to better ensure this.


• Security-Surveillance methodologies and technologies will become an increasing larger way of American life.


• Millennials are likely to be "savers" in a much larger way than the last two generations.

2.  Government Entitlements

The Shift:

• Millennials  overwhelmingly believe student loans are unjust and should be a government entitlement program.


• Existing student loans should be forgiven and paid by the government.

The Social Ramification:

• Candidates that run on a platform of student loan forgiveness will be elected.


• Candidates that run on platforms of Social Security and Medicare means testing will have wide Millennial support.


• Generally, Millennials will be more "left leaning" as demonstrated by Bernie Sanders.

3.  Less Materialistic

The Shift:

• Millennials having grown up with most of their needs being met are less inclined to seek satisfaction from materialism and pursue wealth accumulation.


• Millennials are more inclined to be motivated by notoriety & seek political influence. This stems from their roots in social media,


• This is a trend that has been seen in other countries when opportunities for wealth  creation become more restrictive.

The Social Ramification:

• Millennials will place in jeopardy the US economy being a 70% Consumption economy
  

The biggest long term ramification may be the last. The era of the US economy sustaining itself via consumption may die as the Millennials become the economy! Their motivations and expectations are completely different than any prior generation and the changes will be profound.

Charles Hugh Smith concludes that there may be a consequence which is a even bigger question.

He asks: "Can our financial system and debt-burdened economy enable the sort of life the Millennials seek, or have we run out of room to transition to a lower consumption lifestyle and still service the growing mountain of debt?"

His conclusion: "It seems to me that the Millennials will have to navigate a system re-set that few of them seem to anticipate!"

WHAT IS OFTEN DUBBED "THE SNOWFLAKE" GENERATION