Who's worse: Baby boomers or boomerang children?
Greedy geezers and money-hoarding baby boomers have taken a lot of heat during the economic downturn. Maybe that's not fair. Perhaps it would make more sense to channel our frustrations on the boomerang children -- you know, the twentysomethings who graduated from college, only to move back home after finding very few job opportunities.
As a recent story in the New York Times points out, by freeloading, er, living with their parents, those twentysomethings aren't circulating money into the economy. They're not renting apartments, much less buying furniture, cleaning products, food or cable. Here's an excerpt from the story:
It's a phenomenon that John Maynard Keynes referred to as the "paradox of thrift": Saving is good for the individual, but en masse can hurt the economy by reducing demand.
"Increased housing demand definitely has multiplier effects throughout the economy," said Gary D. Painter, a professor at the University of Southern California and director of research for the university's Lusk Center for Real Estate. "We have these sort of missing potential households," he said, which also means "missing" sales and jobs in industries like retail, construction and manufacturing.
The actions of the young are self-perpetuating. Young people are reluctant to set off on their own until they have greater financial stability. But the economic conditions necessary to make them financially secure are difficult to achieve while consumers like them are still too nervous to start making big purchases, on housing or anything else.
That doesn't put young people in a very good position, does it? On the one hand, the economy needs their money. One the other, they either don't have the money to spare or they're afraid to part with their earnings during a heartbreaking economy. Sounds like what the boomers are saying, only today's economy is least of all the younger generation's fault. If anything, the current crop of twentysomethings spent their entire lives taking calculated steps toward successful careers, and are now in a position of "recalibrating" their expectations, in part because boomers won't retire and create more jobs in the marketplace.
And anyway, shouldn't we be commending these twentysomethings for showing some fiscal responsibility? Here's LearnVest’s take:
It's not the responsibility of recent college grads -- especially those without jobs -- to spur the economy. That (and job creation) are primarily the responsibilities of corporations and the government.
Indeed, the Times reports that several of these young people plan to leave home as soon as they find work, and quotes an analyst, Mark Zandi of Moody's Analytics, who says that getting them hired is the missing piece: "Once we get a little bit of job growth, or even expectations of a better job market, those households are going to start breaking apart pretty fast."
It all makes sense to us. By keeping their expenses low when they either don't have any income or when they are just starting out with their first job, these new grads are actually being fiscally smart.
--Alexandra Le Tellier
Illustration by Ken Orvidas / For The Times