Millennials Need Pro-Growth Economic Policies, Stat

Jan 17, 2017 by

Wealth: Today’s young adults are worse off financially than baby boomers were, a new report shows — a result of years of anemic growth rates. What millennials need now is a 1980s-style booming economy.

The report, published Friday by an advocacy group called Young Invincibles, uses data from the Federal Reserve’s Survey of Consumer Finances to compare today’s 25 to 34 year olds with those baby boomers were in the same age group in 1989.

What it found was striking. Millennials earn less, are less likely to own a home, and have half the assets of their baby boomer counterparts.

The report finds, for example, that the median income for 25 to 34 year olds in 2013 (the last year for which data are available) is $40,581. In 1989, the median income for this age group was $50,910, after adjusting for inflation. That’s a 20% decline.

Even those with degrees are earning less now than they did. The report shows that the median income for a millennial who obtained a college degree without incurring any debt is $61,886 today, compared with $75,422 in 1989 — an 18% drop.

While 46% of boomers between 25 and 34 years old owned a home in 1989, 43% own one today.

And the net worth of today’s 25-34-year olds is half that of this age group in 1989.

What explains this troubling gap? The 2007-2009 recession didn’t help. But plenty of millennials entered the workforce after the recession ended. For them, the problem wasn’t the financial crisis, it was the extraordinarily sluggish economic recovery that followed.

That recovery, which started in mid-2009, was the worst since the Great Depression — with annual GDP growth averaging a record low of 2%. And while the unemployment rate eventually came down, it did so largely because millions quit looking for work, not because of strong job growth. As a result, those graduating from college entered a sluggish job market with few good jobs and little growth.

Contrast that with what was happening in the 1980s, when the economy roared back from the back to back recessions in 1980 and 1981 (which pushed unemployment up to 10%). From 1983 to 1989, annual GDP growth averaged 4.4% — more than twice the rate of the past six years. Given that level of growth, baby boomers couldn’t help but get ahead.

What explains the different recoveries? The 1980s were characterized by pro-growth tax cuts, regulatory reform and government restraint. The past seven years have been characterized by high-taxes, massive regulations, mandates and an anti-business climate in Washington.

Unfortunately, while the Young Invincibles report correctly identifies the problem, its solutions amount to more of the same government meddling that produced the current financial problems.

What’s needed to boost the fortunes of today’s millennials is a return to the pro-growth policies of the 1980s — the sort that Donald Trump has endorsed and will hopefully carry out.

Only about a third of millennials voted for Trump in November, but they all need his pro-growth policies now more than ever.

Source: Millennials Need Pro-Growth Economic Policies, Stat | Stock News & Stock Market Analysis – IBD

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