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Millennial spending will increase inflation (Michael Nagle/Xinhua via Getty Images)

By Tyler Hummel Leaders Staff

Tyler Hummel

Tyler Hummel

Tyler Hummel is a news writer for Leaders Media. He was the Fall 2021 College Fix Fellow and Health Care...

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Feb 16, 2023

Effects Of the Millennial Spending Spree 

One economic analyst is blaming the younger generations’ high spending for inflation woes. 

Key Details

  • The Consumer Price Index (CPI) saw a yearly increase of 6.4% in January, down from 6.5% in December and 9.1% in June 2022. 
  • While the Federal Reserve continues to tighten access to currency, early indications have suggested that high inflation will remain entrenched throughout this and next year until late 2024, when it is projected that the CPI will drop to 2%. 
  • Speaking with CNBC on Tuesday, Smead Capital Management CIO Bill Smead says that young people—between the ages of 22 and 42—will be a driving force for inflation due to heavy spending on necessities and home purchases, potentially intensifying inflation for years. 

Why It’s Important 

Even with recession fears, the job market remains strong and spending is very high, reflecting high consumer confidence in the aftermath of the COVID pandemic. The unfortunate side effect of this could be that high spending and high employment could keep inflation high for longer than expected. 

As Smead notes, inflation is caused by “too many people with too much money chasing too few goods”—and says a similar situation happened when baby boomers overtook the silent generation in population size in the 1970s, when inflation was last a major crisis. 

With more than $2.5 trillion in savings during the pandemic, Americans have made significant purchases in the past year, especially in crucial spending demographics between the age of 19 and 54. However, this trend may change, as millennials are among the hardest hit by inflation, struggling with slow wage growth, student loans, and low homeownership rates, Fortune reports. 

Notable Quote 

“We have 92 million people between 22 and 42, and they’re all going to spend their money on necessities the next 10 years, whether the stock markets are good or bad,” says Smead. 

Home / News / Effects Of the Millennial Spending Spree 
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