Who Is in Better Financial Shape — Millennials or Gen X?

By Nevin Adams • January 07, 2015 • 0 Comments

Despite media attention surrounding the Millennial Generation’s relatively poor economic outcomes during the Great Recession, a new analysis by researchers at the Federal Reserve finds that they have fared better on many measures than both current older adults and earlier young adults.

According to the report, “The State of Young Adults’ Balance Sheets: Evidence from the Survey of Consumer Finances,” compared with young adults in 1989, young adults in 2013 were more likely to own homes, stocks and retirement accounts.

Moreover, young adults in 2013 were less likely to have high debt payment burdens than older adults, young adults in 1989 and young adults in 2001, according to the report.

Young adults in the 2013 survey were born between 1982 and 1995, and young adults from the 1989 survey were born between 1958 and 1971. Young adults from the 2013 survey are a subset of the Millennial Generation and young adults from the 1989 survey consist mainly of members of Generation X.

The report found that between 2001 and 2013, net worth fell among young adults, primarily because of declines in asset holdings, and that net worth was lower for young adults in 2013 than it was for young adults in 1989. However, despite popular accounts of the Millennial Generation’s poor economic outcomes during the Great Recession, young adults in the SCF “have fared relatively well on many measures.”

The analysis noted that between 2001 and 2013, debt holdings (excluding education loans) declined among young adults, as did credit constraints, and that, compared with older adults, young adults experienced a relatively modest decline in net worth in that period. Of course, young adults, who are less likely to own homes or stocks than other age groups, did not benefit as much from the housing and stock market boom between 2004 and 2007, nor did they suffer as much from the subsequent declines in value of those holdings.

There was, however, a cautionary note in the report findings: The sample of young adults in the SCF represents only the population of young adults living independently, not the entire population of young adults. The researchers noted that in conducting comparisons between SCF young adults and the overall population of young adults from other data sources, they found that SCF young adults tend to have higher incomes than the overall population — and that if income is correlated with wealth, this suggests that the financial circumstances of young adults in the SCF could be better than those experienced by the overall population of young adults.