Although the US economy remains strong, a recent article published by CNBC suggests that millennials continue to struggle to make ends meet. Citing a report from Charles Schwab, the article highlighted that “Almost two thirds of millennials say they’re living paycheck to paycheck and only 38% feel financially stable.” In comparison to baby boomers, millennials are spending nearly $120 more monthly on “non-essential” purchases, which include dining out, entertainment, luxury items and vacations. The article continues by explaining why millennials are having a pessimistic attitude towards the economy and one of the main conclusions was due to a lack of financial literacy.
One factor behind the high level of millennials feeling strapped? Two words. Student loans. Within the article, there was an additional survey conducted by LightStream (the online lending division of SunTrust Bank) that concluded around 40% of millennials from ages 20 to 35 have higher credit card debts as well as higher debt in general. One of the main contributing factors to rising debt stems from increasing student loan burdens that millennials face. “The median amount of loan debt millennials carried was $19,000, significantly higher than Gen Xers’ balance of $12,800 at the same age.” According to Pew Research Center, the number of households with student loan debt has nearly doubled from 1998 to 2016.
While the financial picture for millennials appears increasingly tight, that picture doesn’t necessarily seem to be an accurate depiction of the broader US consumer base. To illustrate this, we would highlight a recent chart from our monthly Consumer Pulse survey.
Each month in this report, we survey of 1,500 to 2,000 Americans to get their views and attitudes on the economy by focusing on six main sections: Sentiment, Labor Markets, Personal Finances, Housing, Activity and Investors. This report gives us a great insight into the current trends playing out in the US economy and allows us to spot inflection points in specific areas with respect to employment, spending, budget, investing and other trends. To stay up to date on the latest trends and issues facing US consumers, sign up to gain access to our Consumer Pulse Report.
One question we ask in each month’s survey is whether consumers feel they are living paycheck to paycheck. In this month’s survey, 36.9% of consumers responded affirmatively to that question. While that may sound high, as shown in the chart below, that’s the lowest level we have seen since we started running the survey back in July 2014. So while millennials, which are admittedly a large share of the US consumer pie, continue to feel financially ‘strapped’, the picture for all US consumers is not as bad and the trend is moving in the right direction.