Millennials, traditionally labeled as the “broke generation”, are beginning to shed that stereotype as household wealth among Americans under 40 increased by 49% between 2019 and 2023, according to a Center for American Progress analysis. The average net worth for households headed by individuals under 40 rose from $174,000 to $259,000 during this time period. While there were dips due to factors like inflation and rising interest rates in 2022, overall, young Americans’ wealth is on the rise, indicating that they may be catching up financially.
The surge in wealth among younger Americans can be attributed to various factors, such as growing home values, a strong stock market, and a decrease in non-housing debt. The average value of assets owned by individuals under 40 saw significant growth across different categories, including housing wealth, liquid assets, personal business value, assets like stocks and mutual funds, and durable goods like cars and appliances. Additionally, the average non-housing debt for these households decreased by $5,000, contributing to an overall boost in net worth.
Young Americans also benefited from government intervention during the pandemic-induced recession, which helped prevent the downturn from lasting long. Millennials, in particular, bounced back faster and stronger from the Covid-19 recession compared to older generations in previous recessions. Data shows that the increase in wealth among millennials was significantly higher than that of baby boomers and Gen Xers during their respective recessions. The Covid-19 recession was notably shorter, which may have contributed to the quicker recovery in wealth among millennials.
Despite struggles with student debt, homeownership, and retirement savings, millennials are seeing improvements in their financial outlook as they enter their mid-30s. The increase in wealth among this demographic is a combination of factors, including growing home values, a strong stock market, and a reduction in non-housing debt. The pandemic, while causing economic challenges, also presented opportunities for young adults to pay down debt and increase cash savings, ultimately contributing to their overall financial well-being.
It is important to note that the pandemic-induced recession was brief, officially lasting only two months, which contrasts with the longer recessions experienced by previous generations. This shorter recession period may have aided in the faster recovery of wealth among millennials. The data suggests that millennials have fared relatively well in terms of wealth accumulation despite the challenges brought about by the pandemic, positioning them in a more secure financial position compared to older generations during their respective economic downturns.
In conclusion, millennials are showing signs of a brighter financial future as their household wealth increases significantly between 2019 and 2023. Factors such as growing home values, a strong stock market, reduced non-housing debt, and government intervention during the pandemic have contributed to this trend. Despite ongoing challenges, millennials are bouncing back from economic hardships faster than previous generations, indicating a positive trajectory in their financial well-being.
