Millennials Under Greater Financial Pressure Than Generations Before
NEW YORK — While millennials are typically thought of as breaking the mold in terms of spending habits, the generation is under greater financial pressure than generations before it.
According to a new study from Deloitte, millennials are spending the same percentage of their income on categories as similar-age cohorts did 30 years ago. However, the generation's net worth has fallen by 34 percent since 1996.
Examining consumer data over a 30-year period, results show relatively consistent spending patterns across most categories: food, alcohol, furniture, food away from home, and housing all constitute roughly the same percentage of the consumer’s wallet today as they did three decades ago. Even entertainment, a category where one might expect to see an increase in experience-driven spending, was basically flat.
The real differences show up in several nondiscretionary expenses, such as health care. In fact, today, a growing share of the millennial's wallet is going toward health care, housing and education. Since 2004, the cost of student debt has soared by 160 percent.
"Deloitte's findings debunked many conventional wisdoms about the new-age consumer," said Kasey Lobaugh, principal and chief retail innovation officer, Deloitte Consulting LLP. "In many ways, the consumer hasn’t fundamentally changed. Instead, their behaviors have been triggered by a rise in nondiscretionary expenses and the growing bifurcation between high and low income groups."
Other findings from Deloitte's Center for Consumer Insights include:
- More than three-quarters of survey respondents (76 percent) reported having less or the same amount of free time than just a year before. While the total hours worked in the U.S. has risen by 43 percent since 1980, the increase has been driven by the growth of the workforce.
- Discretionary time is up overall, with time spent on leisure and sports increasing 5 percent between 2007 and 2017, or an additional 14 minutes daily.
- In 2018, consumers traveled to more stores, more often, when compared to the previous year. Consumer-oriented traffic in retail, convenience and hospitality/travel increased by 6 percent. Brick-and-mortar also saw a 2-percent increase in traffic.
- The biggest gains were seen in grocery-related trips, which grew 7.7 percent in 2018, with a notable decrease in visits to traditional retail locations, such as apparel stores, slipping 1.7 percent, and department stores falling 10.3 percent.
- The 15 fastest-declining markets largely center around West Coast urban centers, and the 15 fastest-gaining markets appear in the Southeast and Texas, where traffic is up 29 percent.
To see additional results from Deloitte's changing consumer report, click here.
Deloitte provides industry-leading audit, consulting, tax and advisory services.