The recent financial recession has had a disastrous impact upon Americans at large – bankers, shop owners, the elderly and the young have all seen their prospects darken in different yet connected ways. One of the most important groups in America today is young families, specifically Generation Y – this group can be expected to drive innovation, open up new opportunities and shoulder the burden of baby boomers as they retire (as well as raising the next generation of course). But how are they doing in 2012?
Recent information released by the Bank of Montreal (BMO) paints a gloomy picture for Generation Y, yet things could be much worse.
Their report charts economic indicators of Generation Y in their working and family raising years (2002-2011) and compared them with their parents (1972-81). It was easier for Generation Y to find work, they paid less in mortgages, taxes and interest, and had significantly more buying power. On the flip-side of the coin, home-occupiers now have less equity in their homes and carry much more debt.
The general picture is one of a generation under significant economic pressure, yet not outside the scope of past recessions. But how will the stumbling economic recovery impact young families? To raise their economic fortunes Generation Y is counting on the economy to deliver jobs and available credit. In these areas things are looking significantly less positive.
As far as the job market goes, people between 25 and 34 are much more likely to be out of a job (8.2 per cent) than those between 35 and 54 (between 6.1 and 6.3 per cent). We are all too familiar with the story of college graduates emerging to bleak white collar career prospects, yet this dearth of jobs applies to blue collar professions as well.
The availability of credit is also quite limited, and according to July’s Federal Reserve Senior Loan Officer Opinion Survey the situation is even worse for people with little money for down payments and those who have low credit scores. This means that young families, with little in the way of a nest egg, will be unable to get on the property ladder. Similarly, short term credit can be incredibly difficult to come by, leaving many families unable to deal with unexpected purchases.
There is of course hope on the horizon – low interest rates mean that those who secure mortgages can most likely pay them, while technological innovation will offer up thousands of new jobs that will be snapped up by the young. But unless the job market recovers and credit opens up, Generation Y will find it very difficult to build families that are stable economic units.
The next four years will be incredibly important for young families. The Obama administration succeeded in stabilizing the recession, saving financial institutions and avoiding a cataclysmic shut-down of the auto-industry. Yet a full-fledged recovery has not materialized; the next presidential term must see real, sustained growth, otherwise Generation Y may find itself termed a lost generation.