Moronic story about Millennials
Every so often I run across an article in establishment media that makes such sweeping generalizations, it’s inevitable it will turn out to be wrong — or at least it will be worth revisiting now and then to see how the world has confounded conventional wisdom. I’ve done that with a Wall Street Journal article that goes all the way back to 1995, and now I have a new candidate in an article from the Journal‘s sister website Marketwatch.
The headline is, if nothing else, ambitious: “Young Americans hold the key to Obama’s success: Why the Millennial Generation is our best hope for an economic recovery.” Millennials are the generation that comes after Generation X, born since 1981.
They’re enrolled in college and starting careers, developing relationships and thinking about marriage and family. These young adults, 40% of whom are 18 and over, are in the formative stages of their lives. And there are a lot of them: 91 million people born in the 1980s and 1990s — a group bigger than the Baby Boomers.
How can a generation without much money help rebuild the economy?
Precisely because they’re starting out. They haven’t lost 50% of their nest eggs in the stock-market meltdown; they’re on a path to accumulate wealth. They don’t have a house to sell; they’ll be motivated buyers. They’re educated, technologically savvy, inspired, driven to succeed personally but also concerned for the greater good. And not incidentally, two of every three voters under age 30 marked their ballot for Obama.
A lot of sweeping generalizations mixed in with the demographic data here. Inevitably it has to go off the rails and just a few paragraphs later, it does, in spectacular fashion:
Consider that the number of Americans between the ages of 20 and 29 will balloon between now and 2015. That’s good news for the economy — young people are huge consumers. They have money to spend on clothes, electronics, restaurants and other discretions. Many also plan to buy a house or a condo, get married and have a family.
Where do they have money to spend on “clothes, electronics, restaurants and other discretions” if they have no job after completing their bachelor’s degree (in five or even six years) and have to move back in with the parents? Not only that, but once again we have the conventional-wisdom fallacy that consumption/consumer spending is the be-all and end-all of economic vitality. Savings? Capital formation? Production? That’s soooo 20th Century.
The article acknowledges that young people are heading into a difficult economic patch. But then it proceeds to spin a truly fantastic scenario that ignores every fundamental imbalance in the U.S. economy. I quote at length here, because it must be seen to be believed:
The U.S. labor force is shrinking. The massive Boomer generation is beginning to retire, most Millennials are still too young to replace them, and there aren’t enough workers in Generation X, which is sandwiched between them.
The U.S. had to create some 200,000 jobs a month at its peak just to absorb the new Baby-Boom workers, according to Hokenson, the demographer, who recently published a study on how U.S. population trends over the next four- to eight years could shape Obama’s presidency.
In contrast, the number of new entrants into the labor force is forecast to average just 73,000 a month through 2012 — similar to America in the 1950s and early 1960s, Hokenson said.
Even if the economic recovery is modest, Hokenson noted, the nation’s unemployment rate can be expected to decline faster than most people now think.
“It’s a workers’ paradise,” he said. “That’s what’s possible, based on the demographics.”
The labor shortage bodes well for household incomes. If workers are increasingly scarce, they can demand better pay and working conditions, so real wages rise and living standards improve. But even if wages don’t increase much, with inflation tame for the foreseeable future, their buying power is still greater.
Life becomes more affordable. Millennials won’t spend as much to own a house as their 30- and 40-something counterparts did, so they won’t need to stretch as far or go waist-deep into debt to make ends meet.
“These young adults have a chance to buy a better piece of real estate for their own residence than the fundamentals would have dictated five years ago,” said Robert Froehlich, chief investments strategist at DWS Investments and the author of “Investment Megatrends.”
That frees up money for Millennials to spend on lifestyle, such as home improvements, furnishings, new cars, clothing, restaurants, entertainment, travel, technology and anything young families need.
And unlike their house-poor parents, “they’ll have the money to do it,” Froehlich said.
Guys, I hate to burst your bubble, but what if the Boomers need to keep working, either part-time or full-time, beyond their expected retirement date? This scenario was being bandied about even before their 401(k)s became 201(k)s in September and October. (Actually, this does get a sentence of lip service toward the end of the article.) Oh, there was some other “expert” who figured Millennials “will actually buy the foreclosed homes in the exurbs and suburbs of America,” evidently not considering whether the 40-mile commute has a future in a world where existing oil fields are depleting at 9.1% a year.
There’s even more silliness in the article, mostly having to do with how the new president can make this fantastical scenario come about. The infrastructure rebuilding/stimulus plan figures into this; that’s where the jobs come from. If it doesn’t have the desired effect maybe he can keep all those jobless young people off the streets by falling back on his chief of staff’s proposal for “universal national service.” (The “compulsory” part is merely implied.) Of course, one wonders how civic-minded (that’s a trait conventional wisdom attributes to this generation) the Millennials will feel once they learn the new president’s pick for budget chief wants to cut future Social Security benefits for everyone under age 59.