Stingy millennials to blame for sluggish economy

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JOhnH

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https://www.cnbc.com/2019/10/06/mil...or-sluggish-economy-raymond-james-report.html

Put your panties back on millennials, I'm here to defend you.
The U.S. personal savings rate is rising, and it’s holding back the economy, says Raymond James.
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More personal savings is a good thing.
He believes the rising rate is driven by millennials saving more following the financial crisis.
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That is similar to how the "greatest generation" emerged from the Great Depression.

Part of the reason for the recent "Great Recession" was people borrowing beyond their means. So if millennials learned from that and pull back on the borrowing and spending, there may be an adjustment in the retail sector, but that will even out over time and personal stability will be higher and better if people actually have some savings.
 
EdFred said:
But wait, someone said they weren't making enough money to save any. So which is it? :D
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They're saving their parents money, not theirs.
 
JOhnH said:
https://www.cnbc.com/2019/10/06/mil...or-sluggish-economy-raymond-james-report.html

Put your panties back on millennials, I'm here to defend you.

More personal savings is a good thing.

That is similar to how the "greatest generation" emerged from the Great Depression.

Part of the reason for the recent "Great Recession" was people borrowing beyond their means. So if millennials learned from that and pull back on the borrowing and spending, there may be an adjustment in the retail sector, but that will even out over time and personal stability will be higher and better if people actually have some savings.
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Agreed. Higher savings rates are better long-term for both the economy and individuals.
 
I dunno if the numbers have changed, but I recall from my econ classes that anything above widespread 10% savings starts to hurt the economy, and less than that hurts the individual (and in turn through insolvency and bankruptcy the economy).
 
Oh boy....The savings rate of the millennials is killing the economy! Ha ha. What could the dollar buy 23 years ago? What can it buy now? The ~3% difference in 'savings' has been more than offset by the inflationary policies of the fed since the dollar was taken off of the gold standard in 1971. Look at the graph in the article. See where the savings rate starts to go down? Right when cheap money becomes available. Yeah the millennials did it, oh wait the boomers did it, oh look! a squirrel! I'm done;-)
 
JOhnH said:
https://www.cnbc.com/2019/10/06/mil...or-sluggish-economy-raymond-james-report.html

Put your panties back on millennials, I'm here to defend you.

More personal savings is a good thing.

That is similar to how the "greatest generation" emerged from the Great Depression.

Part of the reason for the recent "Great Recession" was people borrowing beyond their means. So if millennials learned from that and pull back on the borrowing and spending, there may be an adjustment in the retail sector, but that will even out over time and personal stability will be higher and better if people actually have some savings.
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Last month's jobs report is a better example of why the economy is sluggish. Unemployment dipped to its lowest level in years, 130,000 new jobs were created, and average hourly earnings dipped by a penny.
 
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We went to a RV show last Friday: You can even finance a relativeley cheap $14k travel trailer over 15 years(!!!) and it seems that people are actually doing that. By the time it's paid off, they will have paid roughly twice the original price!
Talking to some of the sales guys, I gained the impression that they were all assuming that we would be financing, because this is what everybody else is doing.

This entire culture of financing toys only benefits the banks in the long terms, not the overall economy. All the interest people are paying is pretty much gone and not available anymore for the consumer to purchase other goods.

I am actually hoping that the younger generation is smarter in this regards than their parents....
 
FormerHangie said:
Last month's jobs report is a better example of why the economy is sluggish. Unemployment dipped to its lowest level in years, 130,000 new jobs were created, and average hourly earnings dipped by a penny.
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Well, that makes perfect sense. More jobs are being created so more people are finding and taking entry level jobs. Entry level jobs always pay less than experienced job holders are making.
 
German guy said:
We went to a RV show last Friday: You can even finance a relativeley cheap $14k travel trailer over 15 years(!!!) and it seems that people are actually doing that. By the time it's paid off, they will have paid roughly twice the original price!
Talking to some of the sales guys, I gained the impression that they were all assuming that we would be financing, because this is what everybody else is doing.

This entire culture of financing toys only benefits the banks in the long terms, not the overall economy. All the interest people are paying is pretty much gone and not available anymore for the consumer to purchase other goods.

I am actually hoping that the younger generation is smarter in this regards than their parents....
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Just for the sake of argument, where did all that money go? Did it get burned up or buried somewhere? Or did it actually go to pay someone's salary, who then turns around and spends it again?

I have been known to finance items for ridiculously long times, as long as there was no prepayment penalty. That way, I could take advantage of a good deal when it comes up, then pay it off as soon as I could. Of course, that was years ago. I haven't financed anything in decades. Even my house or plane.
 
Stewartb said:
Where is the economy sluggish? I’m insanely busy. All my manufacturers are insanely busy.
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Only in the news.

Commuting traffic here in Atlanta is insane. Yeah, yeah, I know, Atlanta traffic is normally bad. I've been living here for 30 years. Commuting traffic wasn't so bad 2008-2011 as the economy was hit hard. It come back slowly as the Atlanta economy took a little longer to get kicked back into high gear compared to some other cities. Now it's back to nuts again. Even heading out early in the morning the traffic is going.
 
I was laid off in 2002 and it took me 5 years to find my next engineering job.

That job was eliminated at the end of 2015 and it took the better part of 2016 to find a contract that would give me the experience I would need to get another job.

That 6 month contract lasted 14 months and it took 1 month to find a new position. The company reorganized in August and I was RIF’D. I had a new job before the end of that month and recruiters are still calling me!

If the economy continues to stagnate the rest of the year like it has so far, my portfolio will only return 19% for the year. I could do with a little more stagnation!
 
JOhnH said:
Well, that makes perfect sense. More jobs are being created so more people are finding and taking entry level jobs. Entry level jobs always pay less than experienced job holders are making.
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Just because a job is newly created doesn't mean it is an entry level job. We were looking for software developers last month, but were looking for at least a mid level skill set, typically five years experience minimum. Also, that 130,000 newly created jobs is like .01% of the entire US labor force, even if they were all entry level, that wouldn't have an effect on the overall wage rate.

wayne said:
Only in the news.

Commuting traffic here in Atlanta is insane. Yeah, yeah, I know, Atlanta traffic is normally bad. I've been living here for 30 years. Commuting traffic wasn't so bad 2008-2011 as the economy was hit hard. It come back slowly as the Atlanta economy took a little longer to get kicked back into high gear compared to some other cities. Now it's back to nuts again. Even heading out early in the morning the traffic is going.
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ISM reports that manufacturing is contracting: https://www.instituteforsupplymanagement.org/ismreport/mfgrob.cfm?SSO=1

National Association of Business Economists expect GDP growth to decline from 2.9% last year to 1.8% next year: https://247wallst.com/economy/2019/10/07/experts-expect-gdp-growth-to-drop-to-1-8-next-year/amp/

So, no recession in sight, but a slowing of growth.
 
Crashnburn said:
If the economy continues to stagnate the rest of the year like it has so far, my portfolio will only return 19% for the year. I could do with a little more stagnation!
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What are you in because mine is down down down.
 
EdFred said:
What are you in because mine is down down down.
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YTD + 16%.
S&P500 index fund (40% of portfolio) +19.7%
Intl Stock fund (31%) +10%
Mid-Small Cap fund (19%) +16%
Fixed Income fund (6%) +7%
Value Stock fund (3%) +18%

Seriously considering swapping allocations for Intl and Value Stock funds.
 
German guy said:
We went to a RV show last Friday: You can even finance a relativeley cheap $14k travel trailer over 15 years(!!!) and it seems that people are actually doing that. By the time it's paid off, they will have paid roughly twice the original price!
Talking to some of the sales guys, I gained the impression that they were all assuming that we would be financing, because this is what everybody else is doing.

This entire culture of financing toys only benefits the banks in the long terms, not the overall economy. All the interest people are paying is pretty much gone and not available anymore for the consumer to purchase other goods.

I am actually hoping that the younger generation is smarter in this regards than their parents....
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this has nothing to do with millennials. my baby boomer parents are terrible about financing toys. far more so than myself or the millennials behind me. i'm also not sure some industries are going to be around in 15-20 years, including RVs.

I do know several millennial families that RV, but I would say in general, buying big campers and owning houses with lots to park them on is less common that it was for my parents' generation
 
Ted DuPuis said:
Largely false. As someone who works with mostly millennials, I know most of them are making their own wealth, and saving.
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Largely a joke as a response to the post above mine.
 
I heard something about genY or whatever being more conservative than many past generations.

Which is good, spending money you don’t have and having a rent to own lifestyle and taking government as your lord and savor is not good.
 
Banks are not happy when people save. They may even have to lower the interest rate on credit cards ,if this savings thing keeps up.
 
frfly172 said:
Banks are not happy when people save. They may even have to lower the interest rate on credit cards ,if this savings thing keeps up.
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Same banks we had to bail out?

Good
 
I think it’s fruitless and counterproductive to categorize people by generations. People are individuals. There are frugal millennials and frugal boomers, just as there are overspenders in both groups. I knew a number of shopaholics from the generation that went through the depression, so stereotypes don’t necessarily apply. Not sure why people try to put others into boxes.
 
TCABM said:
YTD + 16%.
S&P500 index fund (40% of portfolio) +19.7%
Intl Stock fund (31%) +10%
Mid-Small Cap fund (19%) +16%
Fixed Income fund (6%) +7%
Value Stock fund (3%) +18%

Seriously considering swapping allocations for Intl and Value Stock funds.
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Looking, I guess I'm up 10% on the year. I just remember being quite a bit behind at one point.
 
EdFred said:
Looking, I guess I'm up 10% on the year. I just remember being quite a bit behind at one point.
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Not unheard of depending on allocation. Q3 volatility may have been a contributor.
 
Everskyward said:
I think it’s fruitless and counterproductive to categorize people by generations. People are individuals. There are frugal millennials and frugal boomers, just as there are overspenders in both groups. I knew a number of shopaholics from the generation that went through the depression, so stereotypes don’t necessarily apply. Not sure why people try to put others into boxes.
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You’re a retired pilot. LOL. Welcome to your box. :)

It only matters if the category is doing something en masse. Analysis isn’t putting anyone in a box they can’t get out of. They can be the outlier if they like.

Usually the phrase “putting in a box” is used for the negative connotation where you’re making it impossible for someone to do something else.

This is more “analyzing market trends” which does have to be heeded. But there’s also a clearly deep desire of the fiscal press right now to find something, anything, that isn’t working.

They’re terrified of the next drop since we are once again at record highs. They don’t want to be blamed for missing it, like most of them did in ‘08.

Still think the most epic rant of my lifetime from the fiscal press was Cramer’s “Open the Fed Window... they’re nuts, they know nothing!” Rant. That was fun.

Still, fiscal prognosticators have as bad a track record as weathermen. They might get tomorrow right...

But they have article deadlines. So you get continuous drivel.

I always remind myself when watching any fiscal news that Buffett says he turns it on and never turns the volume up. He just wants the ticker and headlines. No talking heads. Ever.
 
denverpilot said:
You’re a retired pilot. LOL. Welcome to your box. :)
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Yeahbut... if I don't tell them, that's the last thing they would guess, even after knowing me for a while. I'm pretty much alone in my box. ;)

Of course I've also discovered that the first question after I tell them that I am retired is, "What did you do before that?"
 
Everskyward said:
Yeahbut... if I don't tell them, that's the last thing they would guess, even after knowing me for a while. I'm pretty much alone in my box. ;)

Of course I've also discovered that the first question after I tell them that I am retired is, "What did you do before that?"
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Americans have always been obsessed with the “What do you do for a living?” question. In some cultures it stops at “do”.
 
TCABM said:
YTD + 16%.
S&P500 index fund (40% of portfolio) +19.7%
Intl Stock fund (31%) +10%
Mid-Small Cap fund (19%) +16%
Fixed Income fund (6%) +7%
Value Stock fund (3%) +18%

Seriously considering swapping allocations for Intl and Value Stock funds.
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I'd be careful about what part of International you would go. Europe is about to fall of the rails (or so it seems).
 
NealRomeoGolf said:
I'd be careful about what part of International you would go. Europe is about to fall of the rails (or so it seems).
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Has there ever been a time in modern history when they weren’t? :) If not economically, then they’re about to go to war again over stupid crap. Again.

We, of course, have mastered the art of being at perpetual war without declaring one.

Don’t make too many jokes about how often Poland has been overrun with Polish people. They don’t have much of a sense of humor anymore about their country’s unfortunate geographic location. LOL.
 
denverpilot said:
Americans have always been obsessed with the “What do you do for a living?” question. In some cultures it stops at “do”.
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To our benefit and to our detriment, our identity for many, heck most, Americans has been tied to what we do. It's always, and continues, to be the land of opportunity and what we do drives us in accomplishing things we consider worthwhile to achieve and for many that is work recognition. In other cultures they are not as goal driven but they tend to have a higher quality of life (by that I mean more time away from work, other interests from work etc.). Just the way it is, not good or bad.
 
denverpilot said:
Has there ever been a time in modern history when they weren’t? :) If not economically, then they’re about to go to war again over stupid crap. Again.

We, of course, have mastered the art of being at perpetual war without declaring one.

Don’t make too many jokes about how often Poland has been overrun with Polish people. They don’t have much of a sense of humor anymore about their country’s unfortunate geographic location. LOL.
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Not sure I agree. Western Europe (which is where all the stock money would be anyway) has not been at war for 30 years. The last 5 years Europe has thrived economically. Cracks are starting to form and Brexit is going to take a sledgehammer to the dam holding it all back.

Living here sure gives a different perspective on how Europe works. I cannot stand many of their economic policies or work (labor) rules, but I can see why it is appealing to them to live the way they do. Millenials remind me a lot of Europeans.
 
NealRomeoGolf said:
Living here sure gives a different perspective on how Europe works. I cannot stand many of their economic policies or work (labor) rules, but I can see why it is appealing to them to live the way they do. Millenials remind me a lot of Europeans.
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Very similar to my experience living there in 99 and again 07-10. The Alps also serve as a cultural dividing line, with southern countries adopting the siesta/riposo and, to me, more entitled and ‘experiences’ based philosophy. Not a hard and fast rule, but a good generalization.
 
Every business I deal with is booming right now. I have no doubt that there are some that are hurting now because they probably ballooned earlier. Cars for example, they claim sales are way down when in fact they are still better than only a couple years ago. They are just down compared to what they have been the past couple of years. I do think we are headed to another slight economy decline though as people have spent A LOT recently and most more than they can afford. All of these upside down loans are catching up to them so they will have to stop buying until these debts are paid off or in default.
 
Grum.Man said:
Every business I deal with is booming right now. I have no doubt that there are some that are hurting now because they probably ballooned earlier. Cars for example, they claim sales are way down when in fact they are still better than only a couple years ago. They are just down compared to what they have been the past couple of years. I do think we are headed to another slight economy decline though as people have spent A LOT recently and most more than they can afford. All of these upside down loans are catching up to them so they will have to stop buying until these debts are paid off or in default.
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One thing I always have to remind myself is to take a perspective on what is real. Our management is always telling us our results are not good enough and so I get to thinking things are bad. But if you look as you put it, it really isn't. Compared to a few bad years, we are doing pretty well. The upward trend just slowed down and they make us feel like things are in trouble. The heat just keeps getting turned up.
 
The economy is a complex animal.

Consumption drives the economy - there is no point producing anything, goods or services, unless someone wants/needs to consume (purchase) it.

Credit is consumption brought forward (for the borrower).
Savings is consumption deferred (for the saver).
One isn't any better or worse, or more virtuous than the other, assuming all things in moderation.

Once upon a time the banking system existed to take in savings (short term deposits) and lend money out longer term (mortgages, car loans). The latter loans were "assets" on the bank balance sheet, and they made most of their money on the interest spread, and the leverage against deposits (fractional reserves). Once upon a time...

Now the banks are transaction driven, making their money from fees, and shedding the risk of holding loan "assets" by bundling them up and selling them on to external capital providers looking for yield instruments. Deposit taking is almost irrelevant to their business now. In the ECB and SNB NIRP world, depositors pay the bank to hold their money on deposit. That is how unimportant it has become.

Recency bias plays a big role in the economy. That the savings rate went up (and total outstanding household credit declined) in the aftermath of the global financial crisis should be no surprise. Perceptions of income security are a huge driver of savings behavior. That probably explains a lot about the Millenial cohort savings rate, given the "gig economy" many of them deal with. I am the child of immigrant parents, and I have spent 42 years in the deeply cyclical hydrocarbon energy business. The volatility in job security and income stability is probably responsible for my propensity towards a high savings rate (and the reason I haven't blown the budget upgrading to a turbocharged, pressurized twin, among other things ;) )
 
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