How Millennial Spending Will Change our Economy

This is a guest post by Gary Weiner, a personal finance blogger, on how millennial spending will change our economy. Gary at Super Saving Tips offered to write our first ever guest post on this topic. 

This year, 2016, the millennial generation becomes the largest segment of the U.S. population. The 83 million people born between 1982 and 2000 will for the first time eclipse the baby boomer generation in numbers.

What that means is that millennials’ spending and their impact on the economy is poised to do what baby boomers did back in the early 1980’s.

Baby boomers have controlled and dominated the consumer spending markets since that time, but these two generations came of age in totally different worlds. Here are some of those huge differences.




Different Circumstances

First, millennials are shouldering the great responsibility of heavy student debt, far beyond that of the baby boomer generation.

According to the Institute for College Access and Success, average student debt at college graduation has grown from $18,550 in 2004 to over $28,950 in 2014.

And what’s scarier, many are even facing debts of over $100,000 in advanced degree endeavors.

When I graduated college back in 1971, I had a 10 year federal student loan that was about $3,750 and I paid $31.28 a month until 1981 when it was paid off.

I never felt it was any kind of a burden for me unlike today’s generation.

I had a job as soon as I graduated and I was advancing in my career, so much so that I had a 400% wage increase during that 10 year period.

That’s generally not true for today’s graduates and it has compounded the debt problem.

Additionally, millennials have experienced the 2008 recession and the collapse of the housing market just at the time they might have considered buying a home.

Now they are facing a very strained housing situation which as of this writing hasn’t yet fully recovered after almost 8 years.

Throw in the extreme rate of both unemployment and underemployment and it can’t have painted a bleaker picture for millennials for their economic future.

On the plus side, millennials are the best educated group of young Americans in history with a third of them having a college education.

However, it hasn’t translated enough to engage them in great employment.

Boomers have suffered also, needing to stay in the work force longer because of the economy and not be able to retire.


Different Spending Patterns

While the vast majority of all consumer spending was driven by baby boomers during the past 30 years, it was primarily led by housing, furniture, insurance, and the cost of raising families.

Those categories are the hallmark of upwardly mobile people.

It has been forecasted based on current trends that the next generation will not be spending their consumer dollars in that same way.

Millennials aren’t buying homes the way boomers have done.

The average purchase price of houses has risen over 300% since 1980 even when the 2008 collapse is considered.

Although, when surveyed, most millennials do say would like to own a home, but are delaying it for now.

The ages of 35-55 are the biggest spending times in the American life cycle.

That’s when consumer spending hits its peak on things like housing, furnishings, autos, clothing, and the actual costs of raising a family.

Millennials are not going to spend what boomers did in that same time frame based on the projected trends. Millennials will, however, spend their discretionary income on wants like new technology, clothes, and entertainment which will help spur the economy.

The growing population that is over 65 spends most of their consumer dollars on needs, things like healthcare, prescriptions, food, and other necessities rather than luxuries and a long list of wants.

That does lead to an interesting developing situation.


Effects on the Economy

For the first time in recollection, two generations will overlap in consumer spending so that it may actually have a more dramatic and positive impact on the economy than it has ever done before!

During the next two decades, boomers will continue to work because of necessity, living longer than previous generations and having the ability and desire to live a more active lifestyle than their parents and grandparents did before them.

At the same time, millennials will be continually coming in and joining the 35 and up age group each year, also spurring the economic growth. This pattern will continue on into the 2040’s.

Millennials, in an attempt to deal with the financial stress currently at hand, have resorted to several surprising modifications regarding jobs, careers, and housing.

For one, there’s a large number who have started their own business and sought to make a living working for themselves.

Although a large number of new businesses fail in the first two years, nothing prevents one from trying again and again until they become successful. Working for yourself makes jobs more attainable.

When it comes to housing, millennials seem to be adjusting to renting their living quarters which also affords them highly flexible living conditions to move and travel for an employment opportunity that owning a home wouldn’t quite do.

What is being predicted by market experts is that despite the impending issues facing the millennial population (high debt, the unsure job market and looking at a longer time frame to settle, buy a home and start a family), this combination along with the continuing influence of boomers over the next two decades will mean a bull market and solid economic growth in the US.

Not coincidentally, there was a rise in this economic growth way back in the early 1980’s when baby boomers first took over as the majority of those who controlled consumer spending so it appears that this time it may be even more stimulating to the economy.


Are you a millennial that is concerned about your financial future? Are you looking at trends in consumer spending? Are you considering investing in the key market categories that are related to consumer spending trends?


garyweinerGary Weiner is a personal finance blogger who has retired after 45 years in the world of retail and banking. He is a shopper, born and bred, who enjoys the challenges of finding the best items for the lowest prices. He’s sharing his experience on his blog, Super Saving Tips, and on Twitter at @sst_gary.

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6 thoughts on “How Millennial Spending Will Change our Economy”

    1. Hi Andy,

      Welcome to Stretch A Dime! Thank you, I am glad to liked the post.

      Hope to see you more here.


  1. Wow, what an informative post! Interestingly it has an impact on what we perceive as being the ‘most wanted’ products for the immediate future and retailers and other sellers can equip themselves with this in mind. Thanks for sharing!

    Enjoy the journey!

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