Superficially, last week's University of Michigan consumer confidence report could not have been better: rising above 101, it was the highest number since 2004 (even if it was driven entirely by rising optimism from poorer households, while those in the top third have started to lose faith in Trumponomics). However, less noted among the various survey questions was one troubling finding: for the first time in history, Americans younger than 35 are less optimistic, - and have less confidence in the economy - than older Americans, those aged 55 and over, which includes their parents.
As the Deutsche Bank chart below shows, this has never happened in the 60 years the University of Michigan has been collecting data.
This stark reversal in outlooks is hardly a surprise: as MartkWatch notes, Millennials shoulder more student loan debt than any other generation and face house prices that are far higher than their parents did at their age. Student loan debt has reached $1.4 trillion as the cost of college has soared.
Meanwhile, spending "only" 30% of their income on rent or a mortgage, a golden rule for decades, is near-impossible for most young Americans.
While many are quick to blame "selfish" Boomers for creating the perfect storm for their offspring and future generations, Americans appear - at least on paper- to be concerned about the economic prospects of those who come after them, even if the numbers don't look good.
As MarketWatch reminds us, a 2017 Pew study found that just 37% of Americans believe today’s children will grow up to be better off financially than their parents: roughly 49% of 18- to 29-year-olds believe that the next generation will be worse off, while more than half, or 61% of Americans aged 50 and over believe the next generation will be worse off.
“The U.S. may be one of the richest countries in the world, with one of the highest per capita gross domestic products among major nations, but Americans are fairly pessimistic about economic prospects for their country’s children,” said the Pew study author, Bruce Stokes.
And while an economic depression has yet to be observed, the signs are unmistakable: for the first time in more than 130 years, Americans aged 18 to 34 were more likely to live with their parents than with a spouse or partner in their own household, partly due to millennials getting married later in life and spiraling student debt.
It's not just doom and gloom, and record interest-bearing liabilities: Millennials also have assets. A recent BofA report found that nearly half (47%) of working millennials have $15,000 or more in savings and 16% have $100,000 or more in savings. On the other hand, the definition of assets was a little "loose": BofA asked about the total amount of savings, including bank savings/checking accounts, IRA, 401(k) and other retirement or investment accounts. A nine-year bull market has clearly helped. In any event, the findings stand in sharp contrast to Americans as a whole, who are saving less money than ever (of course, if much of these savings were invested in cryptocurrencies, it is about to get even uglier).
Speaking to MarketWatch, Peter Schiff had a far bleaker take. Schiff said the middle class has been gutted by over-regulation, an escalating cost of living and stagnant wages. “Families are smaller,” he told MarketWatch. "They can’t afford to raise their kids or send them to college without taking out a lot of student debt. It’s too expensive. People are getting married later in life and many don’t get married at all."
He's right of course, but as usual the time to panic will come only after the next event, which will be either an economic depression, or a stock market crash, both of which would be for the ages.