Turns out, to the greatest consternation of some folks on Wall Street, millennials are smart.
“They don’t trust the stock market,” Goldman Sachs determined in a survey. Only 18% thought that the stock market was “the best way to save for the future.” It’s a big deal for Wall Street because millennials, having surpassed the baby boomers, are now the largest US generation – and the future source of bonus checks for Wall Street.
“Millennials will become the most important financial generation in America, and the industry will have to adapt to meet their needs,” the report warned.
The older ones in the cohort have seen the market soar, collapse, re-soar, re-collapse, re-soar…. They’ve seen what amount of monetary gyrations the Fed undertook to re-inflate stocks this time around. They’ve read about the stock market scandals and manipulations, high-frequency trading, dark pools, and spoofing. They’ve seen that the little guy gets mauled, that you can make a ton of money if you get in at the right time and get out before it’s too late. They’ve seen hard-working people get wiped out. They’d rather play with their apps than mess with that infernal machine.
But they do have a problem, smart as they are: they’re carrying on their shoulders a good part of the $1.2 trillion of student debt outstanding. In 2004, Americans under the age of 30 had $146 billion in student loans, according to Equifax. By 2014, in just ten years, the student-debt burden of the under-30 cohort had skyrocket by 152% to $369 billion.
Delinquencies are rising. Some of the millennials have gotten caught up in the for-profit-college scandals that have left them with lots of debt and little education. Now they’re waiting for a taxpayer bailout. It has been the school of hard knocks for them.
But there are consequences. Equifax determined in its analysis that millennials aren’t borrowing money to buy homes like their predecessors a decade ago did – “a trend that may have as much to do with high levels of student debt and poor job prospects as it has to do with trauma from the housing bust….”