For all the press about how millennials are the future of commerce, there is one big and rather problematic roadblock in that narrative.
Millennials are kind of broke – and they might always be.
That is the worrisome take-away from a new Federal Reserve Bank of St. Louis study titled "A Lost Generation?" By the numbers, a typical family headed by a person born in the 1980s earns 34 percent less than what was projected.
And the bad news gets worse. While other generational groups also lost ground during the Great Recession, millennials as a group have largely missed the recovery. Not only have they failed to gain ground, but they actually lost ground after the recession. People in their mid-20s to mid-30s were the only age group that had that experience.
"This represents a missed opportunity, because asset appreciation is unlikely to be as rapid in the near future as it was during the recent period," said the report, which was based on the Federal Reserve's 2016 Survey of Consumer Finances.
Members of Generation X – those born in the 60s and 70s – accumulated 11 percent less wealth than expected (those born in the 60s) and 18 percent less wealth (born in the 70s), though they have greatly closed the gap since 2010, and the Great Recession seems to have knocked them off-course only temporarily. Older Americans – Baby Boomers and up – were actually slightly wealthier than models predicted.
"The Great Recession and its aftermath significantly widened the wealth gap between young and old," the study said.
Falling wealth levels, however, do not seem to be a result of low wages causing income shortages. In fact, those born after the 60s seem to be earning right on track with predictions.
But debt and homeownership rates are both widely out of alignment with models. Though Generation Xers were more likely to own homes prior to the Great Recession, that rate fell below the predicted line as of 2016. But those that did own property have been able to recover wealth in some markets.
Millennials, on the other hand, were for the most part too young to have purchased a home prior to the Great Recession, and have had difficulty buying them since. As of 2016, only 45 percent of millennials born in the 1980s had bought a home.
Instead, their debt issues from student loans, with a healthy mix of auto and credit card debt in the mix.
Millennials born in the 1980s face a "formidable challenge" in restoring their net worth – and, the report found, this could have long-lasting consequences.
"The fact that many families suffered large wealth setbacks during their prime earning and wealth-accumulation years raises the question of whether they will be able to rebuild their wealth to meet major saving goals, including for a home purchase, college tuition for their children and retirement," the report said.
The study wasn't entirely dark – it also noted that workers born in the 1980s also comprise the most educated generation of Americans, and that they have many decades in the workforce ahead of them to make up the gap.
"It is possible that the income and wealth trajectories of this generation will be steeper than those of earlier generations, allowing many families to achieve their wealth goals in the end," the study said.