The Wall Street Journal (WSJ) reported on the 25th that millennials in their 30s in the United States have been hit harder than other generations by the changes in recent years, such as the Corona 19 pandemic and inflation.
Stacey Cocklin (31), who lives in Miami and raises a teenage daughter, was trying to buy her first home right before the Corona 19 pandemic. He works as a construction project manager and earns $40,000 a year, but he lived with his parents for two years to put together a down payment and pay off his credit card debt.
However, as schools closed due to COVID-19, and she had to spend $1,200 a month on childcare for her two children, her credit card loans increased again. As interest rates rose amid soaring inflation, he eventually forgot his savings and ended up in debt of more than $20,000, including credit card loans and personal loans.
WSJ analyzed that the millennial generation was put in a disadvantageous situation from the start. I started working from 2007 to 2009, when the economy was in a slump due to the financial crisis, and there were many cases where income was restricted due to this influence.
This generation was more shocked than other generations when they experienced the COVID-19 pandemic when they were in the midst of giving birth and raising children and buying their own home for the first time.
As schools closed, I spent thousands of dollars on unplanned childcare and private education, and when I was trying to buy my first house, I was pressured by high interest rates and rising house prices.
Such is the case with Mr. Cocklin. He said, “Starting with shampoo, everything that my children need as they grow up has become more expensive. I have no idea what to do.”
According to the Federal Reserve Bank of New York, the total debt of millennials increased by 27% from the end of 2019 to more than $3.8 trillion as of the fourth quarter of last year.
Debt growth among millennials is the steepest among all age groups. The three-year rate of debt accumulation in this age group is the fastest since the 2008 financial crisis.
In an analysis by credit information company Vantage Score Solutions, the average credit card balance of millennial borrowers last month was about $6,750 (about 8.9 million won), up 26% from three years ago. The balance of the older generation, Generation X, is almost unchanged, compared to an 11-15% decline in the older generation.
The average personal loan balance of millennials also increased more than all borrowers. Also, according to the New York Fed, younger borrowers are more likely than other age groups to be late on their car payments.
Credit rating agency TransUnion analyzed that millennials are delinquent on credit card payments more than before the Corona 19 pandemic. In contrast, the rate of card delinquency among the elderly decreased over the same period.
The WSJ pointed out that the rising debt of the millennial generation can deepen the gap between the rich and the poor between generations.
This generation also experienced difficult times such as the economic crisis, felt financially unstable even when the economic situation was good, and analyzed that they were relatively passive about opportunities to increase their income, such as starting a business or investing.
“Younger, less affluent borrowers are under financial pressure as their incomes are unable to keep pace with rising living costs and inflation, and in that sense, a ‘credit gap’ is emerging,” said Silvio Tavares, CEO of Vantage Score Solutions. We don’t see this in people,” he said.
“For millennials, they’re being beaten in all directions. They feel they have no control over their finances,” said Charlotte Principato, a financial services analyst for younger consumers at market research firm MorningConsult. The millennials will also follow in the footsteps of the millennial generation.”