Some interesting patterns have emerged concerning the millennials spending patterns that are surprising the older generations, including the millennials parents. For the millennials, cars and houses are out and technology is in.
In a national survey by Ebates, only 10% of parents thought their millennial children desired high-tech equipment during this back-to-school season. In reality, those millennial children wanted high-tech equipment to the tune of 42%.
Jordan Weissmann reminisces on the radical change from days gone by (Young People Arent Buying Cars Because Theyre Buying Smart Phones Instead Theatlanticcities.com 8/8/12):
Youth culture was once car culture. Teens cruised their Thunderbirds to the local drive-in, Springsteen fantasized about racing down Thunder Road, and Ferris Bueller staged a jailbreak from the burbs in a red Ferrari. Cars were Friday night. Cars were Hollywood.
Much has changed. Millennials are practicing inventory management. Zipcars have replaced car ownership for many millennials. Millennials have discovered the freedom delivered by cars has been surpassed by the freedom delivered by technology. Derek Thompson and Jordan Weissmann, writing in The Atlantic (The Cheapest Generation: Why Millennials arent buying cars or houses, and what that means for the economy September 2012, pp. 4851) drill down to some even more shocking statistics:
In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985. Miles driven are down, too. Even the proportion of teenagers with a license fell, by 28 percent between 1998 and 2008. (p. 48)
Thompson and Weissmann report a similar trend concerning home mortgages:
The share of young people getting their first mortgage between 2009 and 2011 is half what it was just 10 years ago. (p. 50)
Exactly how these trends will affect our economy is a subject rich in speculation and prediction. Some people believe the trends were inevitable, considering the price of gas and the state of the housing market. That does make sense. Buyers respond to market forces and make adjustments.
Interestingly, it is the technology itself that partially enables these trends. For example, Thompson and Weissmann point out smartphones make it easier for people to reserve their Zipcars:
But today, peer-to-peer software and mobile technology allow us all to have access, just when we need it, to the things we used to have to buy and hold. And the most powerful application is for cars. (p. 50)
As a baby boomer, it is hard for me even to contemplate a young-adulthood growth track that would not involve car or home ownership. Nevertheless, that is my generation. That is not necessarily who the millennials are. Times, technology, and people have changed (as they always do).
Exactly how this trend will continue to evolve will be the subject of much study, as will how this trend will affect the economy. And for everyones benefit, that must be the case.
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