November's consumer confidence report showed the largest gap between the confidence of consumers under 35 and those over 55 in the history of the Conference Board's report.
The state of play: Younger people have typically had higher confidence scores, but that has changed in recent years, the data show.
- The chart above shows the result of subtracting the monthly confidence score of respondents over 55 from those under 35.
What's happening: That's largely because older Americans have benefited much more from the current low interest-rate environment and gains from the stock market, Nela Richardson, investment strategist at Edward Jones, tells Axios.
- "People at different ages are experiencing the economy differently," she says.
- "If you’re under 35 you’re looking more likely at student loan debt and really high home prices, even if interest rates are low. If you’re older, you’re probably not as affected by student loan debt, and you’re probably not negatively affected by high home prices, though you might have a huge gain from home equity."
The bottom line: Richardson also points out that younger people are less willing to take on risk assets like equities and have missed out on much of the bull market, in part because of their albatross of student debt.
- "Whereas every other form of debt — from credit cards to mortgages — actually have this wealth effect that makes you want to invest more and be part of the economy, student loan debt makes young people more risk averse, and it makes them more risk averse precisely at the time you should be taking on more risk assets."
Of note: December's consumer confidence report showed the gap between older and younger people shrinking and younger people growing more confident, but the difference remains below the historical average.