The Beach Boys wrote that classic in 1966. It captured post-adolescent teen yearning for at least some of the joys of adulthood; 'we could live together,' 'we could be married, then we'd be happy.' Wouldnt it be nice, indeed.
In those palmy days, the obstacles to realizing that admittedly naive vision were social and moral rather than economic. But in whatever time period you come of age, you face your own reality.
The current situation is simply that there is not enough money to go around. Or, more accurately, for a variety of socio-economic and political reasons, the money is not distributed evenly enough to break the cycle in which those who are stymied find themselves stuck.
With average household income down, net worth down and employment down, it is difficult for the majority think about spending, let alone investing. Spending might mean renting an apartment with friends. Investing might mean buying a house or condo based on the prospects for a stable job, a career, marriage and a family. Which is why the proponents of austerity appear to be either delusional or disingenuous when they point fingers and decry a lack of millenial gumption for the economy's ills.
The actual problem and its solution may, as the following article suggests, be quite simple. A bit more confidence in the future as expressed through expanded hiring, wage increases and job stability that might then spark more spending which would juice demand. And if it takes some government stimulus to get the party started, so be it. One senses that once the US Presidential election is decided the ideological forces that have throttled policy-making for the past two years may finally relent, allowing for the normal functioning of the economy and maybe even some growth. Wouldnt it be nice. JL
Derek Thompson reports in The Atlantic:
Young people are the lazy, smelly scapegoat of the recession. They're not working, they're living at home, they're constantly complaining about their debt, they're not buying cars or houses, and they're not even having babies.
But there is an outside chance that The Twentysomething, the media's favorite economic whipping boy, is poised to become the hero of the recovery, and it all comes down to two words. Household formation. In the last four years, millions of young people who otherwise would be starting families and independent lives have waited out the recession in the cozy bunker of their parents' basement. One in three twentysomethings reported moving back in with their parents for an extended period of time, according to a 2011 Pew report. Some went back to school. Some worked. Some did nothing.
Whatever they were doing, they weren't moving out or starting new "households." Technically speaking, a "household" is any group of people living together: six roommates, a young couple, a family with kids, anything. By delaying their adulthood, these basement-dwellers were -- through no fault of their own -- holding back the economy by holding back household formation. But economists are increasingly confident that this generation is ready to migrate into the real economy.
Wherever they move, they'll make an impact. If they move into apartments, they'll bid up rent prices (making owning a home relatively more attractive) and encourage the construction of more apartment buildings. If they buy homes, all the better: the entire real estate super-industry will get a boost. New households are more likely to buy cars and appliances. They're more likely to buy cable TV packages. And they're more likely to have kids.
Maybe this all sounds a bit like I'm rehearsing the game of "Life" for you, but in fact these details are crucial to economic growth. Independent adults make the economy grow. The longer Millennials delayed independent adulthood, the further we'd be from a full recovery. Just look at the correlation between household formation and housing starts. If you want a housing recovery, folks, you need households.
To be clear, the household formation slowdown isn't Millennials' fault, for two reasons. First, they didn't create the recession, and it's responsible to save money by living with your parents when jobs are scarce and pay is weak. Second, household formation has been slowing down for decades, as middle-class Americans had fewer children and young people put off marriage for later in life.
If you ever had any doubt about the role household formation can have on an economy, just look at our levels during the strong 1960s economy and the crazy spike at the Reagan Recovery. Economic growth is people.
So what happens next? The broad expectation is that Millennials aren't going to spring from America's basements with tens of thousands of dollars stuffed in their ratty sweatpants for a downpayment on a house. They'll be renters before they'll be buyers (if they become buyers at all). As Matt Phillips from Quartz writes, this will probably encourage the construction of more apartment buildings to alleviate pressure on rents as demand rises. It might just be enough to turn the stiffest headwind against U.S. growth -- our awful state of housing investment -- into a light breeze at our back.
When that happens, you can thank the lazy do-nothing Millennials for helping to turn around the economy.
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