Despite the pandemic-induced recession of 2020, new data from the Federal Reserve shows that America’s young adults have doubled their assets over the past four years.
This marks the first time the assets for so-called millennials have exceeded $10 trillion. But, according to the report which tracks American wealth through the third quarter of 2020, this generation, the oldest of whom turn 40 this year, also has a massive debt burden. Millennials, born between 1981 and 1996, hold $4.3 trillion in debt compared to $10.3 trillion in assets. And, much of this debt is held in higher-interest consumer loans as opposed to asset-secured obligations such as mortgages. Older adults who own hard assets such as real estate might be “at an unfair advantage” compared with younger people who continue to struggle to make similar purchases. However, millennials are seeing rapid gains in net worth.
Stock market gains pushed millennial wealth to the highest share of their overall assets in six years, surpassing $5.4 trillion. Real estate and consumer durables in the third quarter also reached record levels. Millennials holdings of corporate equities also rose as well as entrepreneurial millennials in corporate America. While millennials are holding more assets than in the past, it is also true that they are holding onto more cash than investing it, which could be a response to the pandemic.
It is interesting to note the shift in assets from generation to generation. The covid-19 pandemic has definitely had a large impact on millennials as there has been a great deal of layoffs amongst this demographic. Overall, the percentage gains seen by millennials in 2020 far exceed advances by Gen X and the baby boomers, but younger Americans still only hold a small fraction of the wealth of older adults.
Further, the wealth of many younger Americans is also quite rocky at the current time. A recent survey found that people 40 and younger saw the lowest likelihood of finding a job in the next three months than at any time since 2013. As with other financial metrics, there is also a wide ethnic disparity when it comes to affluence with Blacks and Hispanics having much lower levels of accumulated wealth than Whites.
While millennials have certainly made great strides when it comes to accumulating assets, there are still some areas where improvement is needed.