A recent study by TransUnion found that Gen Zers in their early 20s are earning less, have more debt, and higher delinquency rates compared to Millennials at the same age. The study focused on the credit usage of 22 to 24-year-old Gen Zers and compared it to Millennials who were in the same age range in 2013. Gen Zers, born between 1995 and 2012, and Millennials, born between 1980 and 1994, have faced economic challenges early in their careers, with Gen Z dealing with the Covid-19 pandemic and Millennials experiencing the global financial crisis.
One particular challenge for Gen Z is the impact of sticky inflation, which has driven up the prices of essential items like gas and food. Additionally, interest rates are at a 23-year high, leading to higher borrowing rates for auto loans, student loans, and mortgages. The entire US credit economy has experienced higher debt levels and delinquencies across various credit products, with total credit card balances exceeding $1 trillion for the first time in 2023. It is crucial for early-career consumers, especially Gen Z, to establish healthy financial habits to navigate these challenges effectively.
Gen Z’s financial situation was further explored in an interview with Charlie Wise, head of global research and consulting at TransUnion. Wise highlighted that the rising costs of living, particularly in areas like rent, food, dining out, gas prices, and transportation, have put a significant strain on Gen Z consumers. While not all Gen Zers are homeowners, those who rent are facing increasing rental prices, impacting their financial well-being. Wise emphasized the importance of understanding one’s financial limits and avoiding accumulating debt by paying only the minimum on credit cards.
Although Gen Z’s credit card balances per consumer are higher than Millennials a decade ago, it is not considered a crisis. Gen Z consumers are expected to see potential salary increases as they progress in their careers, which could offset some financial challenges. However, it is essential for Gen Z individuals to borrow and spend within their means to maintain financial health. In the United Kingdom, the economy has shown signs of improvement after a short recession, with GDP growing by 0.6% in the first quarter of the year.
Looking ahead, key events in the upcoming week include remarks from Federal Reserve officials, earnings reports from companies like Home Depot and Alibaba, and economic data releases such as the Producer Price Index, Consumer Price Index, retail sales figures, and housing market data. These events will continue to shape perceptions of the economic recovery and financial prospects for various sectors and demographics. Overall, Gen Z’s financial challenges underscore the importance of financial literacy and responsible financial management for the current generation and future economic stability.
