Spending from younger Americans remains elevated, despite high inflation-driven prices as a tight labor market and inflation drive up wages.
Key Details
- Americans came out of the pandemic with more savings than usual, as lockdowns prevented many from spending as much money as usual. Now, Gen Z, those born between 1997 and 2012, is spending that money at higher rates.
- Credit-card data shows that young adults tend to be big spenders, though it is difficult to determine if that spending is out of necessity or because Gen Z can afford to spend, Bloomberg reports.
- Younger Americans just entering adulthood are nearing the time to make big purchases such as a vehicle. Understanding their purchase habits can help predict where the economy is headed.
Why it’s news
Gen Z is more likely to combine desires for financial success with a desire to live comfortably. Many are driven to earn more money by a desire to purchase material items, Bloomberg reports. An Intuit survey found that most Gen Zers would prefer to have what they perceive as a better quality of life than savings.
Many of these young adults also focus on paying for experiences rather than putting away savings. But that doesn’t mean they are irresponsible with money—they just view it differently.
Higher credit-card usage, for example, is often an indicator of financial stress in older generations. However, Gen Z prefers using credit cards to build points and take advantage of rewards programs.
Gen Z is spending more this year than last—the only generation to do so as others cut back, Bloomberg reports. Some of this spending is prompted by wage growth, even though younger workers tend to earn less than older ones. Additionally, many of these young adults have built up savings from recently living with their parents or family members.
While Gen Z is spending more money, the cost of living is also rising. Meaning these young adults may not be buying much more than their elders did just a few years ago—the prices have just gone up.
About three out of every four Gen Z workers surveyed said they have considered taking on a second job or another stream of income, Bloomberg reports.
