GENERATION Y DOESN'T FULFILL THE EXPECTATIONS
For a long while, the US economy could rely on the rising expectations. But millennials are making life hard for companies. Why don't they want houses and cars?
By Thorsten Schroeder
[This article published on August 16, 2016, is translated from the German on the Internet, www.zeit.de. The consumer-lazy millennials are a problem for the US economy.]
Millenials make US car manufacturers despair. They simply don't want to shop anymore. General Motors engaged the marketing experts of MTV and broadcasts like Teen Mom to enthuse the generation born between 1980 and 1999 for its models. Ford made its cars available to the most influential bloggers of the country for test drives - in the hope of inspiring the younger target group. If the branch does not adjust to the tastes of youth, it runs the risk of becoming the uncool "dad at the school dance." So the New York Times quoted an MTV executive at the start of its 2012 collaboration with General Motors.
However the attempts to kindle the young love for the car came to nothing. According to a study by the US Public Interest Research Group, millennials drive shorter distances, shift to public transportation, ride bicycles or walk. Buyers between 21 and 34 amounted to 27% of new car owners in the last years; 1n 1985, they were still 38%. The number of youths who applied for drivers' licenses fell 28% between 1998 and 2008. Not a single car manufacturer appears among the 31 brands that are most admired.
America long relied on the rising generation. One's first- or second car was part of the American dream alongside one's home. For decades, around half of the income of a typical American family flowed into transportation and housing.
In Los Angeles, living and working under one roof is becoming a solution, pod-share instead of housing and office. Sublime lofts for the well-to-do are solved differently for entrepreneurs in Los Angeles.
NETFLIX INSTEAD OF DRIVE-IN THEATERS
"It was expected that a 30-year old has a family, a house, and at least one car," said Perry Wong from the Milken Institute in California. That seems to be changing on the real estate market. The share of persons under 34 years of age with mortgages is half as great as ten years ago. "We have to do with a new reality," Wong says.
The revolution from Silicon Valley has shaken traditional American branches to the core. Whoever has access to a Smartphone can order a Uber car in many places to go from one place to another. Young Americans prefer services like Zipcar instead of storing the car in the garage 90% of the time or searching for hours for a parking place and buying insurance. The Smartphone is more desirable than the car since the drive-in movie theater was replaced by Netflix. The distance to friends can be covered simpler and cheaper.
WHAT ARE THE CAUSES?
The way Americans live is defined more strongly by Start-ups. WeLive, a subsidiary of the New York office provider WeWork, offers millennials old rooms for work - without long-term rental contracts since a better job may arise in another city. A mortgage with a thirty-year running time is a relic from times when people had the same job all their lives and owned the same house, writes John Marshall from the Lippincott consulting agency. "The Facebook post may be more important today for self-esteem than the Italian vacation, the luxury trip or the car in the garage."
Skeptics of change dismiss the present development as a consequence of the precarious economic situation besetting many young Americans. Massive debts from education, an unstable job market, and restless biographies ensure that millennials will postpone large purchases to the future and live longer with their parents. A few days ago, the New York Times criticized the government for creating too few incentives and means of help.
The auto-branch hopes falling gas prices and better jobs could trigger a change in the trend and point to higher sales numbers. The analyst Wong is skeptical. This development can only partly be referred back to economic reality. "We are witnessing a generation with very different expectations," the economist says. What this means will first be clear in a few years.
TRANSFORMATION OR SHIPWRECK
This change could have far-reaching consequences for the US economy. The real estate market is an important leg of the economy that keeps many other branches alive. The construction branch stands and falls with the desire of Americans for their own home. The credit economy is not the only branch dependent on a flourishing housing sector. Without it, the low-interest policy of the US Federal Reserve would be largely ineffective. In the 1980s, the Federal Reserve made mortgages affordable with the lowest interest rates - and fueled a building boom that brought the country out of the recession. The auto-branch is still responsible for a large part of blue collar jobs that are not cushioned by new boom branches like technology.
Not everyone sees the development as depressing. Life in a narrower space will stimulate creativity in the country, economists argue. Productivity increases because there is less idling when assets like cars and homes are shared. When Americans spend less money for cars and houses, they have more money they can save or spend for travels or education, Peter Wong explains. In a constantly changing world of work, investments in one's abilities are more important than one's own home.