They’ve lived through recessions before, and this is how they’ll adjust their spending for another…
- Most young people believe a recession is on it’s way, or that we’re already in one
- In the event of a recession, Gen Z and Millennials are prepared to cut out unnecessary spending
- Dining out and takeout will be the first cut from their budget
Gen Z and Millennials have witnessed, and lived through firsthand, several major recessions that have shaped their perspective on finances. The Great Recession in 2008 left a huge impact on them; many Millennials were affected directly by the hit on the job market as they graduated from college. One expert tells NPR that Millennials experienced “scarring effects,” or the lasting negative impact of entering the job market at the time. But, Gen Z was impacted too, even though they were young. In fact, in 2016, 62% of the oldest of Gen Z told YPulse they don’t remember a time before the recession, as compared to only 36% of Millennials. Then, they witnessed the comparatively brief, but intense, recession as a result of the COVID-19 pandemic.
Now, many are hearing conflicting information on whether or not they’re witnessing the warning signs of another one. Google trends show that searches for the phrase “are we in a recession” are even higher than in March of 2020, meaning everyone is looking for a solid answer. When it comes to how young people feel about finances, YPulse’s latest Personal Finance and Services report shows young people are worried—60% say they’re worried they’ll never meet their financial goals. And given the issues inflation has caused them in the past few months alone, it’s not hard to see why.
But, how will these feelings play out should another recession become their reality? YPulse asked 13-39-year-olds about the state of their personal finances, as well as the potential for a recession, and how they would respond to it should it set in. These three stats show how many Gen Z and Millennials are feeling about the economy right now, and how they’re prepared to handle a recession:
When YPulse asks 13-39-year-olds to think about the current state of the economy, 44% agree we are going to be in a recession in the near future, but 40% say we are in a recession currently. Millennials, many of whom have already experienced two major recessions as adults, are significantly more likely than Gen Z to say we are in a recession already. In fact, 42% of Millennials say we’re currently in a recession. And, when YPulse asked what young people’s biggest financial worry is as an open ended question, inflation / recession and cost of living were top answers. One 27-year-old male says their biggest financial worry is “the recession and how long it’s going to last.”
And while some experts say the expected recession is likely not going to be as bad as the ones these gens have already lived through, it’s scary for them nonetheless. They’ve only ever seen recessions that rock the norms of their lives, and even young Gen Z are worried about it happening again. One 13-year-old female tells YPulse their biggest financial worry is inflation, “because everything costs more to buy and wages are staying the same.”
With recession on their minds, employment has certainly been a concern for young people. But, while they’re feeling squeezed financially, the interesting reality YPulse data shows is that their employment numbers are as healthy as ever; 69% of 13-39-year-olds say they are employed—the highest they’ve reported employment since before the pandemic recession. Still, their feelings about money are more negative than they were last year, showing just how big a toll inflation has taken on them. While they should be feeling more successful than ever, the realities of the economy have them worried about their financial futures.
Whether or not they believe a recession is ongoing at the moment, 46% of young people say if we went into a recession right now, they would only buy things they need in response. YPulse has already told you that inflation is impacting their current shopping decisions. Their back to school shopping plans were already impacted by inflation, and more BTS shoppers said they would be making purchases at the dollar store than last year. And while YPulse’s Mass Merch Mentality report already shows young people much prefer retailers like Amazon, Walmart, and Target to department stores, rising prices are driving their purchases even further towards the options that will save them the most money.
Looking into the pending holiday season, 61% of Gen Z and Millennials tell YPulse the economy / inflation is going to be impacting their holiday shopping budget this year. They’re even thinking with a necessities-only mindset when it comes to gifts; 66% of young people agree that because of the economy, they’re going to ask for more essentials as gifts this year.
In addition to only shopping for what they need, 47% of Gen Z and Millennials say if we went into a recession right now, they would cut back on dining out / ordering takeout. This would be significant for their budget, as 54% of all young people, employed or not, tell YPulse they typically spend their money on dining out / ordering takeout, an expense second only to clothing, shoes, accessories, and apparel.
Like their clothing shopping, these gens’ dining out preferences already lean toward what’s most affordable. YPulse’s The End of Foodie Culture (As We Know It) trend report shows that 55% of young people already say they typically go to fast food restaurants when they go out for a meal, making this their most popular answer. Though 50% say they typically go to fast casual restaurants (like Panera Bread and Chipotle), as well as 50% choosing casual dining (like Applebee’s or Olive Garden), these more expensive options are likely to be the ones they cut back on. Given that less than one third of young people say they typically go to fine dining restaurants already, these numbers are also sure to decrease if they choose to cut their dining out budgets.
With so many feeling that they’re already in the thick of a recession, experiential spending will likely take a downturn sooner than later. In addition to cutting back on eating out and ordering in, 36% also say they would cut back on travel spending, and 31% say they would cut back on buying brand name products. So, in the coming months, as their holiday shopping season approaches at the same time as prices rise, their spending budget will likely look more necessity-focused than ever.
YPulse paid users can access the full Personal Finance and Services report and data here.
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