Thursday, December 13, 2018

The reason millennials aren’t spending as much money is they don’t have any

One problem is that the power elite don't want to admit that high income inequality, and lower wages for workers, hurt the economy by holding down spending by large numbers of people.

By Matt O'Brien
December 13 at 6:23 PM

It is the question that has launched a thousand TED talks: What do millennials want? Or, more precisely, why don’t they want the things I am selling?


Or maybe, just maybe, the generation that graduated both with more debt and into the worst recession in 80 years simply cannot afford to spend money like the ones that preceded it. Now, I know, I know, there is nothing delightfully counterintuitive about this.


… Which, according to economists at the Federal Reserve, really is the reason young people today are not buying as much stuff as young people of yore.


Which is to say young people are not spending as much money right now not because they do not want to, but rather because they do not have any. Or at least not as much as young people did in the 1980s, 1990s, and early 2000s.


The question, then, is not whether this is true, but rather why it was so hard for us to see something that so obviously was. After all, as the researchers succinctly put it, millennials “are less well off than members of earlier generations when they were young, with lower earnings, fewer assets and less wealth." Is it really a surprise that only 34 percent of them had bought a home by 2016, compared with the nearly 50 percent of Gen Xers and baby boomers who had at that stage of their lives? It should not be.

The problem, though, is we live in a media culture that prioritizes what is interesting but wrong over what is boring and true. Take unemployment. We literally spent years debating why it was so high in the wake of the biggest financial shock in history, worse even than the Great Depression.


Never mind that it was entirely predictable unemployment would still be high when the stimulus had not been big enough to fill our economic hole.

Sometimes the obvious answer is the correct one. Sometimes unemployment is high because we have not done enough to make it low. And people are not buying things because they cannot afford to.

The only thing worse than not being clever is trying to be too clever.

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