By Mary Humphreys
The diverging experiences that we all encounter in our lives will shape our attitudes towards our wealth; however are there macro-economic trends at play that alter the generational perspectives?
It is agreed that the millennials entered the work force around the time of the last financial crises of 2008, this understandably impacts them feeling rather more cautious about financial matters than generations before them. Millennials have developed a tendency to become more fiscally conservative and due to the financial crises have a predilection towards saving just like the baby boomers in the post war era.
Whilst millennials are saving savvy, it is not for the longer term. They have a focus on the immediate shorter goals such as a holiday or luxury items as opposed to saving for retirement, which for them is too far in the distance.
The millennial wealth gap has been motivated by comparatively flat incomes, minimal savings, higher levels of consumer debt and decline in housing equity. Whilst these insights from an analytical perspective have some inherent value we must be mindful of their confines, such as aligning people within substantial spans of time and assuming they share proportionately the same characteristics would be presumptuous.
Millennials share a range of formative experiences that contribute towards their view point however; if we take a step back we can see that we have an aging demographic. One implication of this is the percentage of population which will presently be in their prime working life. The knock on inference possibly being a slow-down in economic growth due to the lack of people fiscally contributing to society, with more children and seniors being dependant on them for support.
Looking beyond events that shape their stance, Millennials have had exposure to fundamentally different social landscapes due to technological innovation and advances in communications. The youngest of the generation rather frighteningly have no memories of life before connectivity.
Whilst there are positive driving factors such as the increased numbers staying on in education and to pursue postsecondary education, it can be argued that they are better educated than prior generations and going forward have the propensity for higher salaries.
It's not all a gloomy outlook as we should not forget that some of generational gap will eventually close as boomers age out of the population and pass their wealth onto their heirs, and that millennials may catch up some of the gap if low unemployment rates and good savings habits continue.
Such a review would not be complete with a cursory nod to the impact that the coronavirus has had on the global economy and market so far. At the time of writing (early March) it is considered that the virus has become one of the biggest threats to the global economy and financial markets of our generation. One cannot escape the news coverage that the virus has had on the global economy and markets worldwide. This has been perpetuated by the level of disruption to the economy from restriction measures rather than the number of cases.
If the virus is contained, in my opinion it should only be a temporary disruption to the economy. Right now it is fingers crossed that businesses can resume normal economic activity by June in order to facilitate a rebound. The flip side of this does not bear thinking about as if it continues to spread and the economy suffers further, this may trigger a lengthy economic disruption and trigger a fully-fledged recession. Let's not forget that additional fiscal and monetary policy support and enhanced structural reforms in all countries could help restore growth, improve the confidence of consumers and investors and reduce uncertainty.
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