Generation Z and Millennials have long been considered the backbone of the economy, but now this boom might be faltering. Many young people are struggling financially, and the coming months and years are not expected to be easier.
Who is it about? Meredith Ann Whitney is an American businesswoman and financial analyst. She became known for successfully predicting the financial crisis of 2008. In this context, she was referred to by the magazine Bloomberg as the “Oracle of Wall Street.”
In a recent episode of “Barron’s Roundtable” aired by Fox Business, Whitney explained that while Generation Z and Millennials have supported consumer spending and are often seen as the backbone of the economy post-pandemic, their financial fundamentals are becoming increasingly problematic. There are various reasons for this.
Gen Z and Millennials have long been seen as the backbone of the economy with high spending
What has the situation looked like so far? According to Whitney, the purchasing power of Gen Z and Millennials has supported the U.S. market in recent years, especially the so-called “Avocado Toast” group: This refers to individuals who are very young, well-educated, and enjoy consuming a lot.
What is changing now? However, the situation has changed dramatically in recent years and months. Rising costs are particularly hitting young people hard, and in the U.S. student loans that need to be repaid also play a significant role:
- Gen Z and Millennials are spending disproportionately more than previous generations on rent, insurance, and mobility: the cost of living has risen disproportionately.
- They bear a heavy burden from consumer and student loan debts. About one in seven members of Gen Z have maxed out their credit card limits, and the number of outstanding payments is significantly higher than that of older generations.
- Many have to rely on savings or consume less to manage the high expenses: According to surveys, up to 40% are skipping meals or restaurant visits to pay rent.
Whitney sees rising unemployment and declining purchasing power
Whitney’s forecast is grim: Whitney predicts that the purchasing power and financial stability of Gen Z and Millennials will continue to suffer over the next year, particularly due to debts, declining assistance, and high living costs. This could not only worsen their personal situations but also have noticeable effects on the overall economy.
Whitney also expects the unemployment rate, currently around 3%, to rise to over 4% to 5%, which could further increase pressure on the economy.
Whitney emphasizes that the impacts of wage garnishments on student debt and the cessation of health subsidies next year will bring “entirely new challenges,” primarily for Generation Z and Millennials.
Companies have heavily focused their marketing efforts on these younger generations, who will now experience “real pressure on consumer spending.” Therefore, Whitney predicts that “Generation Z and Millennials will be very weak next year.” Some companies have already lowered their forecasts due to reduced purchases.
More and more young people want to earn money as content creators. It is becoming increasingly easier to start a career as a content creator and earn a living without a college degree. After all, you only need a smartphone to get started: Generation Z earns millions with their side jobs, and many young people believe they no longer need to study
