Millennials, long presumed to have less interest in the nonstop consumption of goods that underpins the American economy, might not be that different after all, a new study from the Federal Reserve says.
Their spending habits are a lot like the generations that came before them, they just have less money at this point in their lives, the Fed study found. The group born between 1981 and 1997 has fallen behind because many of them came of age during the financial crisis.
“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,” wrote authors Christopher Kurz, Geng Li, and Daniel J. Vine.
Their findings are grounded in an analysis of spending, income, debt, net worth, and demographic factors among different generations. The conclusion that millennials aren’t all that different also holds for the researchers’ more granular examination of expenditures on cars, food, and housing.
“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,” they conclude.
So much for the young folks favoring “experiences” over tangible goods.
Millennials aren’t unique when it comes to what they spend their money on, either. The report finds that shifts in expenditure shares between different goods and services have been broadly consistent regardless of age. Housing and food are two areas where millennials have spent less than previous generations, with the younger cohort paying more for education. As a caveat, spending on avocado toast wasn’t specifically tracked for this analysis.
What’s old is new again. The paper observes that some of the millennials’ parents were subject to similar baseless grumbles of “kids these days” from their elders.
“A similar question was posed 20 years ago when Baby Boomer profligacy was being compared to the Silent Generation’s penchant for saving,” they wrote. “Speaking to that debate, Sabelhaus and Manchester (1995) were able to separate fact from popular myth at the time and provided evidence that consumption had not increased as much as income, and that Baby Boomer asset accumulation had in fact outpaced that of the previous generation.”