We’ve all felt the impacts of inflation on our daily lives, especially since rates began to soar in 2020. We’re all trying our best to cut costs and save where we can, especially young adults in America.
It’s reported that nearly half of all young adults are opting to live with their parents to combat the rising prices of rent, groceries, and other expenses that come with independent living.
So where are these people spending their money? Luxury goods.
According to the U.S. Census Bureau, 52% of adults between the ages of 18-29 are living with parents, and only 1-5 of those adults reported their parents charging them for rent. Of those paying rent to live with their family, nearly half are paying more than $500 each month, which is considerably less than the national average for a 1 bedroom apartment.
The findings are the results of a Pew Research Center analysis, USA Today, The University Of Minnesota, and a team of Morgan Stanley analysts led by Edouard Aubin.
Aubin says, “When young adults free up their budget for daily necessities, they simply have more disposable income to be allocated to discretionary spending. We see it as fundamentally positive for the [luxury] industry.”
Influencer culture is alive and well with young adults. Popular creators have made six-figure salaries off of posting content online showing off their gaming systems, designer clothes hauls, or latest collector-coveted sneakers. Products are pushed out constantly, many in the form of paid ads and partnerships. This easily impressionable demographic likely feels a bit of a push to follow the latest trends, even if they’re paying handsomely for the experience.
Gen Z is purchasing luxury goods 3-5 years sooner than most millennials did. It’s predicted that by 2030 Gen Z and Gen Alpha will hold 1/3 of the luxury goods purchasing power. How long will this lifestyle hold up as Gen Z begins to face the pressures of settling down, getting married, and eventually moving out?
The analysis results show that the number of young adults living with their families is higher than it’s been since the Great Depression, only made worse by the Covid-19 pandemic. As the world continues to find a new normal, only time will tell if this demographic will trade in their Gucci shoes for a key to their first apartment (or home) any time soon.