The Kids Aren’t Alright: More Millennials Are Living with Their Parents
Pity the millennial, poster child of the Great Recession. A popular meme portrays the typical millennial as a basement-dwelling economic loser, forever condemned to live in the nether regions of his parent’s house. Unfortunately, that meme is not without basis. The recession seem to have hit millennials particularly hard, making it even more difficult for young people to find good jobs and to establish their own households.
In some respects, things are looking up for millennials. The U.S. job market is strengthening, making it easier to find work, and wages are starting to creep higher. The unemployment rate for young adults (ages 18 to 34, excluding full-time college students) has been heading lower since peaking near 12 percent in 2010; the latest unemployment reading for millennials is 7.7 percent.
However, there is one notable sticking point, and it echoes that basement-dwelling meme. Even though household formation rates have rebounded overall, millennials are still not moving out and establishing their own households like they used to. In fact, more millennials are living with parents or relatives than before the recession, according to new research from Pew.
In 2007, before the recession hit, 71 percent of millennials were living independently. In 2015, that number has fallen to 67 percent, with no sign of bottoming.
On the flip side, 22 percent of young adults were living in their parents’ homes in 2007. That number has risen to 26 percent this year.
The Pew report doesn’t look at why millennials are sticking so close to home. However, it does suggest that the relatively simple economic argument about the lack of good jobs no longer tells the whole story. Since the economy is recovering, however unevenly, there are likely other factors in play. One could be cultural: More young people simply enjoy living at home and are in no hurry to move out. Perhaps the U.S. is becoming more like Italy, where adult children often live at home until they marry.
That’s not to say that money plays no role in the trend, though. One big economic factor not addressed in the Pew report is pretty basic: rising rents. This graphic from Zillow makes it clear that rents have been soaring all over the country. More than $3,000 for a one bedroom in San Francisco? With those kind of numbers, living at home makes all the sense in the world.
Why Craft Brewers Are Crying in Their Beer
It may be small beer compared to the problems faced by unemployed federal workers and the growing cost for the overall economy, but the ongoing government shutdown is putting a serious crimp in the craft brewing industry. Small-batch brewers tend to produce new products on a regular basis, The Wall Street Journal’s Ruth Simon says, but each new formulation and product label needs to be approved by the Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau, which is currently closed. So it looks like you’ll have to wait a while to try the new version of Hemperor HPA from Colorado’s New Belgium Brewing, a hoppy brew that will include hemp seeds once the shutdown is over.
Number of the Day: $30 Billion
The amount spent on medical marketing reached $30 billion in 2016, up from $18 billion in 1997, according to a new analysis published in the Journal of the American Medical Association and highlighted by the Associated Press. The number of advertisements for prescription drugs appearing on television, newspapers, websites and elsewhere totaled 5 million in one year, accounting for $6 billion in marketing spending. Direct-to-consumer marketing grew the fastest, rising from $2 billion, or 12 percent of total marketing, to nearly $10 billion, or a third of spending. “Marketing drives more treatments, more testing” that patients don’t always need, Dr. Steven Woloshin, a Dartmouth College health policy expert and co-author of the study, told the AP.
70% of Registered Voters Want a Compromise to End the Shutdown
An overwhelming majority of registered voters say they want the president and Congress to “compromise to avoid prolonging the government shutdown” in a new The Hill-HarrisX poll. Seven in ten respondents said they preferred the parties reach some sort of deal to end the standoff, while 30 percent said it was more important to stick to principles, even if it means keeping parts of the government shutdown. Voters who “strongly approve” of Trump (a slim 21 percent of respondents) favored him sticking to his principles over the wall by a narrow 54 percent-46 percent margin. Voters who “somewhat approve” of the president favored a compromise solution by a 70-30 margin. Among Republicans overall, 61 percent said they wanted a compromise.
The survey of 1,000 registered voters was conducted January 5 and 6 and has a margin of error of 3.1 percentage points.
Share Buybacks Soar to Record $1 Trillion
Although there may be plenty of things in the GOP tax bill to complain about, critics can’t say it didn’t work – at least as far as stock buybacks go. TrimTabs Investment Research said Monday that U.S. companies have now announced $1 trillion in share buybacks in 2018, surpassing the record of $781 billion set in 2015. "It's no coincidence," said TrimTabs' David Santschi. "A lot of the buybacks are because of the tax law. Companies have more cash to pump up the stock price."
Chart of the Day: Deficits Rising
Budget deficits normally rise during recessions and fall when the economy is growing, but that’s not the case today. Deficits are rising sharply despite robust economic growth, increasing from $666 billion in 2017 to an estimated $970 billion in 2019, with $1 trillion annual deficits expected for years after that.
As the deficit hawks at the Committee for a Responsible Federal Budget point out in a blog post Thursday, “the deficit has never been this high when the economy was this strong … And never in modern U.S. history have deficits been so high outside of a war or recession (or their aftermath).” The chart above shows just how unusual the current deficit path is when measured as a percentage of GDP.