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.


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.


HRClinton yrad Tue, 11/14/2017 - 19:40 Permalink

The "Doesn't matter" Generation. In the sense that...It's not as though they are going to fix root problems: eliminate the cartel of central banksters, and all its members. Go "Full Attila", or go home. Oh, wait... they're already at home.

In reply to by yrad

RAT005 IridiumRebel Tue, 11/14/2017 - 20:37 Permalink

I think one big question is did they bring socialism attraction onto themselves or where they duped by elders that wanted them to want socialsim?  They seem so content to live the role of Beta Fucks that at this point I guess, "What difference does it make?"From my experience, born in the early to mid 60's was a real sweet spot.  Too young to be affected by Viet Nam, educated when US school system was still pretty good.  Computers were just entering mainstream as those students were entering higher education.  So not only were they on the cutting edge of computers for their careers, but computers were taught as a logic machine, not a media machine.  So learning computers meant learning science and code, not how to edit a video.  Interest rates were high for this group when they were purchasing 1st cars and homes but if they got into a little something, the next 20 years of falling rates was an incredible wealth building housing boom.  My friends that bought first houses weren't thinking about granite and big screens, they were thinking about commute, taxes and schools.

In reply to by IridiumRebel

IH8OBAMA MozartIII Tue, 11/14/2017 - 21:00 Permalink

Three things happened going from boomers to millenials.1) Boomers and previouse generations were raised with the "spare the rod and spoil the child" theory.  They also had chores and duties in the family structure.  Today, if you just raise your voice to your child you're likely to find yourself in jail and your children taken away.2) Boomers mostly had their mothers home as homemakers.  They were given direction, chores and rules to follow with an at home parent.  Today, both parents work and the school system and their peers raise the children (or indoctrinate them).  They have no moral or responsibility training.3) Democrats took control of the school sytems and do constant indoctrination of children turning them into SJWs.

In reply to by MozartIII

Laowei Gweilo IH8OBAMA Wed, 11/15/2017 - 01:49 Permalink

1) Boomers and previouse generations were raised with the "spare the rod and spoil the child" theory.  They also had chores and duties in the family structure.  Today, if you just raise your voice to your child you're likely to find yourself in jail and your children taken away. don't agree with the last sentenceonly thing practically outlawed now is beating kids and plenty of progressive and conservative studies show it doesn't work anyhow and typically results more in aggression than obediencethe best methods are still strictness about time, play, and money and it's nothing to do with laws that stops this, but every thing to do with retard Gen X-ers scared to have their kids 'hate' them  i think when you say 'it's cuz we can't hit kids anymore' it massively reduces the blame off retard parents. there are PLENTY of better ways yet to make sure ur kid doesn't become a libtard

In reply to by IH8OBAMA

Vlad the Inhaler Tue, 11/14/2017 - 19:42 Permalink

Gen X got screwed the worst.  Because we were told if we made the same sacrifices as our parents, we would reap the same rewards.  At least millenials are in a position to see that this is bullshit.

umdesch4 holdbuysell Tue, 11/14/2017 - 20:06 Permalink

Yup, you just described me. Right in the middle of Gen-X, and I've been working my ass off for very little. All the responsibility, none of the authority. Parents were pretty poor, and I worked to pay for my degree, worked for everything I have. I will have retirement money (investments, and a fair amount of physical PMs at the bottom of a large body of water) to hopefully stay out of a cardboard box, and leave this world with zero. I call Gen-Xers the 'break even' generation.

In reply to by holdbuysell

Utopia Planitia umdesch4 Tue, 11/14/2017 - 20:32 Permalink

Hey, you aren't alone. I am from the tail end of the Baby Boomers and I have done the exact same thing as you.  I have no option but to work my ass off until the day I drop if I want to eat and have a piece of tent over my head.  So don't feel so sorry for yourself.  All my friends (in my age group) are in the exact same boat.  This is all an artifact of too many "voters" voting for "free sh$t" and voting lying scum into office time after time after time after time.  Until both of those acts cease you will not see anything change.  So far I don't see much hope of any generation getting a clue.

In reply to by umdesch4

scintillator9 Vlad the Inhaler Tue, 11/14/2017 - 20:04 Permalink

Every generation has its trials and challenges.Lets not forget that the Baby Boomers had the happy fun times of Vietnam, and interest rates on mortgages which approach and exceed what many pay on credit card interest (15% plus).It is always easy to lay the blame on the the generation before oneself, or after oneself.I have said before that I have seen a Millennial say to a Generation X person that THEY are the reason everything is screwed up.Again, blame is easy. Divide and conquer is easy. Don't fall for it. 

In reply to by Vlad the Inhaler

Atomizer Tue, 11/14/2017 - 19:50 Permalink

Unlucky? Most parents taught there children outside the Depotism system. Only you lose Credit Suiss. No one is buying your bullshit. Bail me out. We taught the kids to see thru your insolvency shitstorm. 

ThrowAwayYourTV Tue, 11/14/2017 - 19:52 Permalink

I have, well I cant really call him a friend. But! I know a guy who has a 26 year old son who is totally useless. Still, dad keeps buying him the best. He lives at home, drives a beamer, has a $3000 set of golf clubs, $2000 set of ski's and does nothing but party on daddy's 34' boat which daddy doesn'r even use. I heard him say once, "Well dad, you know how my generation is."My prognosis is that Mom and Dad, A/K/A (Scared shit mother fuckers to say no) have totally ruined their own.

Atomizer ThrowAwayYourTV Tue, 11/14/2017 - 20:35 Permalink

Not as elaborate, having the same problem with Mrs. Atomizer kids. My DNA child is in Tampa, FL. He runs a IT business. They are all around 25 year's of age. Her two kids are not motivated, they live in luxury at another house we own. Pisses me off. Not my kids, bite tongue. Colin's business. I love him. http://millennialtouch.com/I hate the name of site. That's dad speaking. On right, click navigation. That's my boy. Good kid. Very proud of him serving in Military in special ops. I love him for his ambitions. 

In reply to by ThrowAwayYourTV

A rope leash Tue, 11/14/2017 - 19:57 Permalink

They are damaged by a combination of poor parenting, bad education, drugs (many have been on mood drugs since childhood, prescribed, and of course, illicit drugs from a young age), superfluous television-radio-internet device exposure, and social media reality dissonance.  It doesn't matter. There aren't many jobs for them and working doesn't pay the rent anyway, mom's boyfriend does. I can't see blaming them. A society creates the kind of people the society is composed of...in this case, idiots.

Haloween1 Tue, 11/14/2017 - 19:59 Permalink

I know a kid, graduated from University of Illinois two years ago with a degree in chemical engineering.  Got pretty good grades, as I'm told.  After he graduated, I asked his dad what the kid was up to.  "Oh", his dad said, "he's weigning his options."  Now, two years later, the kid spends his days playing Pokemon Go.  Never has he even sent out a resume.   His mom says he's a delight to have around the house.  I estimate the degree cost the parents closer to a quarter of a million.  The parents are of the boomer cohort, want to retire but cannot afford to.  Their daughter currently attends U of I, working on her degree in water something or other.  Boomers are stupid.  

RAT005 Haloween1 Tue, 11/14/2017 - 20:57 Permalink

I know some basics of that environment.  UofI ChemE is top 10 in the nation, kind of second tier excellent.  Without a minority waiver, a kid needs to be top 10% of highschool with ACT around 30. Starting salary for this degree is close to $70K and I'm open to anyone arguing higher.The kicker is that some kids that bright turn college into a side gig while they pursue nerdy hobbies.  I have also met some that have no ability to write a cover letter or resume.  If you knew nothing else about them you would think they were a high school drop out.Combine the two paragraphs in the worst way and you get a kid that is too polite (like it's an achievement), very smart at learning what they are told to do with a book and a syllabus, have a strange attention span that needs to be entertained, and can't communicate an original complex thought that isn't the output of calculations or computer programming.Pleasent worthless bots, ask the kid's parents if this sounds familiar?  I suggest an intense program of reading non technical material and writing a lot of reports describing that material.  Don't stop until they remove their disfunctional head out of their ass.

In reply to by Haloween1

Atomizer Haloween1 Tue, 11/14/2017 - 21:07 Permalink

Welcome to the club, one of Mrs Atomizer's son graduated in 3 years. Caught up with his brother. IT computer science at University of Akron in hell hole of Ohio. They aren't looking, I see Sprint phone bill on both accounts. Limited outbound calls and some texting. 10 hours at most per month. They aren't looking. To comfortable living off of us. Mrs Atomizer had a major crackdown today. I can't engage, they will both be in tears after I'm finished with them. Not my biological children. Mrs Atomizer will crack the whip. I have been sending out there resumes. They got cold cocked in not picking up there phone thru a multitude of recruiters via email back to me. All hell broke loose this morning. My baby is alpha personality, just like me. Take cover if your in doghouse. Winks 

In reply to by Haloween1

RAT005 Atomizer Tue, 11/14/2017 - 22:12 Permalink

Fascinating to hear different versions of the story.  Not incapable of looking or not having the social apptitude to present their technical brilliance in a convincing way, but flat out rejecting the outside help to guide them into something productive with their relatively hard earned credentials.Good luck to you, my step bought a 1-way ticket to a dead-end instead of bucking up to what her family could help her achieve.....broke her mother's heart.

In reply to by Atomizer

Atomizer RAT005 Tue, 11/14/2017 - 23:11 Permalink

These aren't my DNA kids. Have to be careful. I wasn't exactly popular when I banded all their High School weekend sleep overs and soup kitchen mouths to feed. Our house was like a weekend child daycare facility. It was pathetic. Ithroes them out. We are talking about 15 kids, had no idea who the parents were. I could be sued. That's the shit I went with John and Steve. We are approaching a year from Graduation, 2016. No fucking job. I'm sending resumes out on there behalf. How fucked up is that? Mrs Atomizer ripped into them today. Once she saw recruiting companies emailing me back stating we can't reach the kids. The kids lies about we are trying to find a job came a end. Hadn't I started to reach out to recruiting firms, it would be the same lie. We can't find a job. They were busted. Edit: check the phone activities you pay for your 25 year old kids phone plan. Mrs Atomizer didn't believe me, once she saw recruiter emails, all hell broke loose with her kids. 

In reply to by RAT005

Irate Samurai Haloween1 Tue, 11/14/2017 - 23:57 Permalink

I don't understand the point of this anecdote. I and many of my friends went to great Universities and got good grades. I have applied to hundreds of places and have done my fair share of networking and I still haven't gotten shit. I have a worthless double major in economics and philosophy and an even more worthless Master Degree in Accounting. Too many degrees chasing too few jobs.

In reply to by Haloween1

I Write Code Tue, 11/14/2017 - 20:00 Permalink

Inequality and mobilityInterest Rates and Rates of ReturnIslamGlobalizationFor those in the west.  For those in China, globalization is of course wonderful, but they still suffer from the rest.Also, millennials were "unlucky" enough to be misedumacated into socialism, so they don't even have the concept of fighting for themselves, of taking a stand, taking responsibility.  It's all out there, somewhere.And their dopamine is all used up by video games and the social web.

atx_0110 Tue, 11/14/2017 - 20:04 Permalink

Grab the popcorn. As boomers crawl towards senility, they expect this broken millenial generation to carry them over the finish line by fixing their pensions and paying for their medical bills... then will rush to call them ungrateful when they don't thank them for the honor.