The Great Recession affected broad swaths of the U.S. economy and society. The millennial generation—a term that generally describes those born after 1980—was no exception.
Writing in the first 2014 issue of EconSouth, senior research analyst Mark Carter explored how the economic downturn has shaped the millennial generation.
"The Great Recession has reshaped many millennials' plans and opportunities," wrote Carter. One big difference is that millennials are not getting married or buying homes at the rate of previous generations. In 2012, 36 percent of 18- to 31-year olds lived in their parents' home, according to data from Pew Research Center. Among the same age group, just 25 percent were married, compared to 30 percent in 2007.
Rising education costs and the accompanying growth in student loan debt have also influenced millennials' economic decisions, the article noted. Indeed, according to a New York Fed report, total student loan debt for those under 30 grew from $144 billion in the first quarter of 2005 to more than $322 billion at the end of 2012. Although young people have taken on more debt to fund their education, it is likely a worthwhile investment. For starters, college graduates outperform their peers with less education on key measures such as personal earnings, job satisfaction, and full-time employment, Carter noted. So, although they've taken on more education-related debt, millennials have in the process "become the best-educated cohort in U.S. history."
The growing burden of education-related debt, along with weak job prospects and stagnating wages, have likely hindered household formation rates, Carter said. Perhaps not surprisingly, household formation fell dramatically during the recession, and the largest declines occurred within the young adult cohort, according to research by Atlanta Fed economist Timothy Dunne.
For a more in-depth discussion of millennials and household formation, be sure to read "The Economic Plight of Millennials" in the latest issue of EconSouth.