A new research report published by the Federal Reserve concludes that millennials - those born between the years 1981 in 1997 - aren’t that different from their parents when it comes to spending money, with one exception: they are poorer, generally as a result of them "coming-of-age" during the financial crisis.
The paper "Are Millennials Different?", authored by Christopher Kurz, Geng Li, and Daniel J. Vine who found a nice way of saying that millennials are constantly the butt of jokes and media attention (the generation has “received considerable attention from economists and the popular press”, the paper reads) and sought to compare and contrast the socioeconomic and demographic characteristics of millennials with other generations.
After examining Millennials’ income, personal savings, and consumption expenditures, the report concluded that “millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.”
The study was done across races:
... Incorporated a good cross-section of educational backgrounds:
... examined marriage rates:
And looked at real average annual expenditures per household by both age and generation:
The report also analyzed the average age of vehicle buyers and heads of households:
Finally, it used data like real income by year and generation:
... And spending among generations:
The Fed researchers found that average age and income were the two factors that explained most of the difference in spending.
"It primarily is the differences in average age and then differences in average income that explain a large and important portion of the consumption wedge between millennials and other cohorts," the researchers conclude.
And so, the running joke about millennials preferring experiences to things doesn’t seem to hold true; they only wish they had more cash:
"We find little evidence that millennial households have tastes and preference for consumption that are lower than those of earlier generations, once the effects of age, income, and a wide range of demographic characteristics are taken into account."
What about the constant complaining by and about millennials: The paper found this to just be the same grumbling and moaning that older generations do with every younger generation.
"A similar question was posed 20 years ago when Baby Boomer profligacy was being compared to the Silent Generation’s penchant for saving," the paper stated.
The biggest delta between generations came when the paper examined net worth:
Turning to net worth, which puts together the asset and debt comparisons described above, we find that millennials in 2016 have substantially lower real net worth than earlier cohorts when they were young.
In 2016, the average real net worth of millennial households was about $92,000, around 20 percent less than baby boomer households in 1989 and nearly 40 percent less than Generation X households in 2001.
Finally, we note that while the inequality of assets holdings and net worth has risen appreciably for the entire population during the past few decades, these inequality measures were largely flat among the younger households.
A fascinating conclusion for certain. Maybe the next question the Fed should spend tens of thousands in taxpayer funds to research is "Where could all have this debt come from?"