Federal report says millennials are killing plenty of industries because they’re poor

Millennials have often been blamed for the killing of various industries. However, a Federal Reserve study shows that the issue is far more complex, and the blame doesn’t rest with them.

“Millennials, long presumed to have less interest in the nonstop consumption of goods that underpins the American economy, might not be that different after all, a new study from the Federal Reserve says,” Bloomberg’s Luke Kawa and Jeremy Herron reported recently.

They explained: “Their spending habits are a lot like the generations that came before them, they just have less money at this point in their lives, the Fed study found. The group born between 1981 and 1997 has fallen behind because many of them came of age during the financial crisis.”

The Federal Reserve study suggests that differences in spending between millennials and earlier generations aren’t due to “unique tastes and preferences.” Instead, the authors—Christopher Kurz, Geng Li, and Daniel J. Vine—highlight broader technological advances, ongoing demographic shifts, and changing economic cycles as key reasons behind these spending patterns.

A significant factor, as the study points out, is that most millennials came of age during the Great Recession, which severely impacted their financial security during their early adulthood years.

“Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth,” the study reported. It further emphasized that “Conditional on their age and other factors, millennials do not appear to have preferences for consumption that differ significantly from those of earlier generations.”

The study also revealed that average real labor earnings for male household heads working full time were 18% and 27% higher for Gen Xers and baby boomers, respectively, compared to millennials when they were young. For young women, the wage gap was smaller—12% for Gen Xers and 24% for boomers—but the financial disparity between generations remains significant.

As millennials continue to face economic challenges, their purchasing behavior remains a focal point for various industries. With lower disposable incomes, millennials are forced to be more selective about their spending, leaving many products out of reach for them.

With the economic landscape still recovering in 2025, the question is whether millennials will eventually begin to shift their spending habits as financial conditions improve.

The Federal Reserve study suggests there is “little evidence that millennial households have tastes and preferences for consumption that are lower than those of earlier generations.” Millennials have even started spending similar amounts on cars as past generations, now that they’re less burdened by the recession’s long-term effects.

However, some experts believe that the psychological impact of the Great Recession continues to shape millennials’ financial behavior, even in 2025.

“I think we have got a very significant psychological scar from this great recession,” Kimberly Greenberger, a Morgan Stanley analyst, told BInsider.

“One in every five households at the time were severely negatively impacted by that event,” Greenberger continued. “And if you think about the children in that house and how the length and depth of that recession really impacted people, I think you have an entire generation with permanently changed spending habits.”

Article based on the federal study - https://www.federalreserve.gov/econres/feds/files/2018080pap.pdf

Other Sources - https://www.bloomberg.com/news/articles/2018-11-29/fed-says-millennials-are-just-like-their-parents-only-poorer