(1) Wealth inequality will get worse.
(2) This will create a huge generation gap.
Baby boomers are the largest and richest generation we have ever seen.
If you include the Silent Generation, older Americans own nearly two-thirds of the wealth in this country. Gen X has a quarter of the wealth, while Millennials own a tenth of the pie.
Due to the varying wealth, older generations have the opportunity to spend more money:
There was a story in The Wall Street Journal that looked at the divide in the economy, which is great for older parents, but not so great for their adult children:
Here’s an anecdote from the story:
When Milan Jevtitch completed his PhD in chemical engineering in 1986, he immediately got a job at Procter & Gamble. He climbed the corporate ladder, bought a spacious four-bedroom house for his family and saved for a comfortable retirement.
The job search for his daughter was much more difficult. Anais Jevtitch, 24, graduated with honors from Ohio University in December 2023 and has lost count of the number of applications she has submitted for positions in marketing, social media, and film and television production. Nearly two years later, she still lives in her parents’ colonial home on the outskirts of Philadelphia, where she works part-time while she continues her relentless search.
“’Ghosted’ is the term she uses,” Jevtitch, 68, said of his daughter. “I’m very frustrated, almost angry… It’s really hard for her to even get interviews.”
Young people are also concerned about the prospect of artificial intelligence replacing their entry-level jobs. Youth unemployment has risen from 5.7% to 10.7%.
The housing market is not helping.
John Burns data shows first-time homebuyers are older than ever before:
This is probably the worst time ever to buy a home for the first time, from a cost perspective.
So that’s it? Young people are screwed?
It’s not easy being young right now. But look at the history of youth unemployment:
That figure of 5.7% was the lowest since the 1950s! Current interest rates are still below the long-term average.
Look at how high youth unemployment has become historically:
1950 – 14.0%
1958 – 16.9%
1961 – 17.2%
1971 – 16.0%
1975 – 16.3%
1983 – 19.9%
1992 – 14.5%
2003 – 14.8%
2009 – 19.9%
Young people have been through tough times in the past and come out on the other side okay.
I graduated in 2004.
The only jobs available to me at the time were becoming a mortgage broker or an analyst for a subprime lending department at a bank (I dodged a bullet there). When the 2008 financial crisis hit, everyone said to us:
Just be glad you have a job at all.
Do you want a raise or promotion? In this economy?!
It took me years to find my way. There were so many jobs I applied for but didn’t get. I felt sorry for myself. I felt lost. I felt like a failure sometimes.
But not getting those jobs was one of the best things that ever happened to me. It has pushed me to stand out from the crowd.
I’ve read a million books. I studied. I got my CFA. I went to school at night to get my MBA. I asked for help from my boss. I started writing.
Living in a difficult job market forced me to try harder. You can focus on the economic data collected and become a statistic, or you can try to improve your own position in life by focusing on what you can control.
The good news is that young people are better prepared for this moment than I am.
They are smarter, better educated and have more insight into their career options. Every time I talk to a group of students, I am impressed.
This week I spoke to a University of Colorado finance class. Instead of preparing a speech, I asked them to bombard me with questions. I was impressed with the topics they wanted to discuss: calculating dollar costs, automating investments, applying market knowledge to your career path, thinking about investing at market highs, choosing your investing philosophy, the biggest investing mistakes, investor psychology, and more.
These kids are so much further along in their learning journey than I was at their age. I had to catch up for years after I left school. The young people I talk to already follow the markets, read about them, study history, understand market psychology, listen to podcasts and more.
At their age I didn’t do any of that.
Young people know what kind of companies they want to work for. They know what kind of work they want to do.
I flew blind when I got out of college.
So yes, young people today face numerous challenges. Some are new, but every young generation in history has had to deal with something.
I am convinced that today’s youth are far better prepared than any generation that came before them.
I remain optimistic about the young people of today. They’re going to find out.
Michael and I talked about inequality, generational wars, the plight of the young and much more in this week’s Animal Spirits video:
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Further reading:
All the jobs I didn’t get
Here’s what I’ve been reading lately:
Books:
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