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Inflation Wipes Out an Entire Gen Z’s Aspirations

  • Gen Z entering the workforce facing higher living costs and real estate prices with fewer options and thin asset balance sheets. 
  • Effects of inflation and elevated real estate prices could affect long-term consumption patters for Gen Z as they delay marriage and buying a first home – with demographic shifts that could affect specific sectors more heavily than others (e.g. childcare providers).

How you fair in life often has as much to do with when you started, as it does where you started.

And for Gen Z, those born between 1981 and 1996 and are just coming into their earning years, inflation is pushing their economic lives backwards, while their forebears enjoy rising asset prices.

Just as they’re graduating from college, moving out on their own and starting their first jobs, Gen Z is being hammered with soaring real estate prices and a cost of living that is surging at the fastest pace in four decades.

It’s no wonder then that Gen Z have taken to investing in everything that their seniors would be hesitant to touch – from cryptocurrencies to meme stocks – in the hopes of gaining a leg up.

Unlike Millennials, Gen X and Baby Boomers, Gen Z don’t necessarily own the assets that will help their personal balance sheets keep pace with inflation.

More Gen Z are staying with their parents or delaying marriage and consumption and purchasing power is also significantly lower than their parents’ generation.

Around 34% of Americans aged between 18 to 29 are also holding student loans, according to the Education Data Initiative, at a time when borrowing costs are expected to rise.

Making matters worse, what little stocks that Gen Z may have purchased in the pandemic-era pump in asset prices are likely all underwater now, possibly delaying the use of those assets that could have gone towards buying a first property or getting married.

Timing is everything –those who put money in the S&P 500 at its pandemic depths, would still be up by around 80%, but those who invested at the start of this year, would be staring at paper losses of 18.7%.

Financial advisors suggest that although the drop in stocks this year has come as a surprise and inflation is squeezing budgets, the pain is likely temporary.

The U.S. Federal Reserve seems to believe that price pressures should plateau towards the end of this year, as supply chains become smoothed and with the Russian invasion of Ukraine likely to wind down.

China is also expected to eventually overcome its zero-Covid policies, and its factories and ports should be pumping out products again for consumers everywhere.

But that rosy scenario could also be overly optimistic.

For starters, even if Russia’s conflict with Ukraine degenerates into a long-drawn out skirmish that is confined to the country’s Donbas region, major Ukrainian ports remain out of reach, and it will take time for its battered agricultural sector to heal and export again.

More economists are also predicting stagflation, a period of slow growth and high inflation, which will make the experience of Gen Z even more challenging.

And worst still, austerity for Gen Z could affect long-term consumption patterns, especially at this generation eventually enters into its peak earning years over the next few decades.

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SuperCryptoNews is a global leading blockchain and crypto news provider, covering daily news on the latest tech and trading developments in crypto. We bring you expansive crypto news coverage especially in Asia, with a focus on Singapore, Thailand and Southeast Asia.

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