Millennials and Gen Z helped propel consumer spending in 2023 and that could all be coming to an end in October once student loan repayments resume in the United States. The student loan repayments and rising interest rates on credit card debt will bring new budgetary pressures to these consumers in a big way.
Gen Z and Millennials are often shamed for their reckless spending on goods and services but that spending helps lift the economy in the most meaningful way, expansion. And to be honest, that spending isn’t all that reckless, they’ve spent money on the same things as other generations. The difference is that they’ve had less money because they’ve had to pay more for necessities, mostly housing and groceries. They are the most resilient demographics and arguably the most important to the economy as a whole.
Furthermore, as few members of this demographic own significant real estate, a good chunk of their spending continues to go towards travel and recreation, entertainment, and food. But these spending habits might be reversed in Q4 as Gen Z and Millennials gear up for increased debt servicing costs, market participants could see retail spending grind to a halt and even reverse. See the chart below to see by the numbers: