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Millennials are ‘dramatically financially worse off’: report

Millennials are “dramatically financially worse off” than older generations, according to a new study by Deloitte.

Since 1996, the net worth of American consumers under the age of 35 has fallen by 34 percent.

Millennials are spending more on non-discretionary expenses, with the cost of student debt growing by 160 percent since 2004.

A new study reveals that millennials aren’t actually different from Gen X or Baby Boomers in how they spend their money — they just have less money to spend.

Millennials have been blamed for the murder of industries from golf equipment makers to razor manufacturers, as sales have tumbled in recent years.

“They are often branded as being more narcissistic, more idealistic, more socially-conscious, and more experience-oriented than any of their preceding generations,” reads a Deloitte study published this week. “They have even been blamed for ruining everything from movies to marriage!”

However, the study — written by Kasey Lobaugh, Bobby Stephens, and Jeff Simpson — ultimately debunks many of the narratives about millennial consumers.

Deloitte’s survey of more than 4,000 consumers, 450 billion points of location data, more than 200 billion credit card transactions, and government data revealed that millennials spend their money on roughly the same things that their parents did 30 years ago.

However, millennials are “dramatically financially worse off” than older generations. Since 1996, the net worth of American consumers under the age of 35 has fallen by 34 percent.

The financial crisis and college debt — not avocado toast — are changing how millennials spend their money

Money spent on food, alcohol, and restaurants accounts for roughly the same percentage of millennials’ income as these categories did in 1997. In other words, millennials aren’t skipping out on homeownership because they’re wasting their money on avocado toast.

“In many ways, the consumer hasn’t fundamentally changed,” Kasey Lobaugh, Deloitte’s principal and chief retail innovation officer, said in a statement. “Instead, their behaviors have been triggered by a rise in non-discretionary expenses and the growing bifurcation between high and low income groups.”

People spent 16 percent more on housing in 2017 than 2007. Health care costs increased by 21 percent in the same period. Education spending skyrocketed by 65 percent as student debt soars. Since 2004, the cost of student debt has grown by 160 percent.

All in all, 17 percent of 25 to 34 year olds’ income went towards these non-discretionary costs in 2017, compared to 12 percent in 1997.

The rise in non-discretionary income has hit lower-income millennials especially hard. The bottom 40 percent of American consumers had less discretionary income in 2017 than they did a decade prior. The next 40 percent didn’t do much better, with only the top 20 percent seeing meaningful income gains.

Looking at the growth in incomes over the last decade for a higher-income group of households, making more than $100,000, compared to a group making less than $50,000 reveals just how stark this difference is. Income growth for the higher-income group between 2007 and 2017 rose 1,305 percent more than the lower-income group.

Deloitte’s conclusion echoes a 2018 study from the Federal Reserve that found millennials had fallen behind economically because they came of age during the financial crisis.

This article was originally published on Business Insider. Copyright 2019.

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