Student loan debts are debilitating and consuming. Savings accounts have little and are becoming obsolete. The job market craves individuals with years of experience but will not facilitate gaining that experience. Trade war sees no end on the horizon. In other words, the future of the millennial generation doesn’t look so bright within the upcoming recession.
Last year, The Wall Street Journal surveyed economic forecasters and more than half predicted that the U.S. economic expansion would end by 2020, which means that the next recession could come quite soon. Recessions cause instability for anyone, but the next one will particularly affect this age group, as it seems like they never recovered from the 2008 financial crisis. Due to the Great Recession, millennials — individuals born between 1981 and 1996 — were set on an economic course that is a briar patch of sorts and led to the worst job market in 80 years.
This generation was particularly vulnerable to financial damage and suffered the most, as the last recession hit while many were in college accruing substantial loan debt. The last recession catalyzed a domino effect that situated them on a path of slow wealth accumulation and financial instability. According to the Federal Reserve, as of 2014, millennials were making 10 percent less than the Baby Boomers at the same age, which, paradoxically, is occurring at a time where the economy is larger and the country is “richer.” Research has also found that millennial women are also earning less than Gen X women.
Millennials are also becoming parents and having a child while undergoing a recession only adds more financial stress. Although millennials are currently notorious for holding off on saving and building a family than older generations, more than a million women becoming mothers every year – Pew Research found that over 17 million mothers in the U.S. fall within the millennial age bracket. This budding age group will be at greater risk when the next recession hits and can further implicate succeeding generations.
According to a 2018 report by the Federal Reserve Bank of St. Louis, one of the risks these circumstances pose is placing the older group of millennials (those who faced the bulk of impact from the recession compared to younger group who lived the recovery period) as a “lost generation” that is impeded from substantial wealth accumulation and social mobility.
Even though hardly any millennials can put money away to save for their future, they were found to be the most financially conservative generation – as claimed by UBS, an investment banking company. The silver lining to this situation is the fact that younger millennials were exposed to the detrimental effects of the previous recession; therefore, they are more attuned to financial security and how to maneuver an economic crisis.
Because millennials have already gone through a recession, whatever the approaching recession brings will be faced accordingly and hopefully, the current generation (Gen Z) will struggle less and gain more financial wellness.
By Valeria Bula