Why Young Americans Feel Stuck in Today’s Economy — ft. Ed Elson & Kyla Scanlon
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What forces are shaping the economy for young Americans?
Welcome to the second and final episode of Prof G on Economics, a special series focused on the forces shaping the economy and your financial life. I'm Ed Elson, co-host of Prof G Markets. I'm joined again by Kyla Scanlon, economic commentator and author of In This Economy, How Money and Markets Really Work. Together we will be answering your questions on the economy and what it means for your money. And if you'd like to submit a question for next time, you can send a voice recording to officehoursofprofitgmedia.com or post your question on the Scott Galloway subreddit. Kyla, thank you for joining us.
How are millennials redefining traditional spending patterns?
Thank you.
Are you ready to get into this?
Yes.
Our first question comes from Spencer Combs on Instagram. They say, quote, it seems like a growing number of millennials priced out of home ownership and delaying kids are redefining traditional spending patterns. Rather than channeling money into homes and early family life, they're allocating more toward experiences, pets, and accessible luxuries. These categories may increasingly replace those older economic anchors. How do you see this generational reallocation of spending influencing the economy overall? And what opportunities could emerge as a result? Kyla, what say you to Spencer Combs?
I think it's an interesting question and it actually becomes an American dream question.
What is aspirational displacement and how does it affect spending?
So there's something called aspirational displacement where people who can't afford to buy a house, which is that traditional path of the American dream, they start buying experiences, they start spending on their pets because they have additional income, but they can't, you know, make a huge purchase like a house. And so it's an interesting thing that we're seeing in the economy and And on the previous episode, I talked about Bommel's cost disease and how goods were getting cheaper and cheaper because we've gotten better and better at producing them. Services have taken a longer time to get cheaper because it's much harder to make services more productive. It's very easy to automate a car factory, much harder to automate a physician facility.
And so I think that's also part of it is that it's much cheaper to access these accessible luxuries. We also have international trade, which has informed a lot of the access to these luxuries, oftentimes which come from abroad. And then the experiences part is a lot of travel, too. And so the average American travels a whole lot more than they used to. And so these are interesting indicators of economic health. So a lot of people have a sense of financial nihilism because they might not necessarily be on the path that they want to be with the American dream, but they can afford these things.
How does financial nihilism impact consumer behavior?
And so it does create a weird discrepancy in the economy where we see strong retail sales, but we see consumer sentiment so low. And in terms of how... It's changing the economy. You see companies catering to it a lot more. Like there is a whole airline that caters just to dogs. I think it's called Bark. Have you seen this? Have you seen that? You can fly your dog on the Bark plane. Yeah. No, I'm serious. Oh, God. Yeah. It's something that happened. Did not know that. It's something that happens in higher income countries is, you know, more and more so they'll spend on these sorts of things. It's the same pattern that we saw in Japan as well. South Korea, too. So, yeah, it makes a lot of sense. And there's going to be a lot of luxury brands that are able to capture that.
A lot of dog airplanes that are able to capture that. And it does represent a strange amount of economic health.
What misleading economic indicators should we be aware of?
I think the thing that's so depressing to me about it is it's like, we don't have enough money to buy houses, but we do have enough money to buy flights for our pets. And that's such a weird in-between stage, which is almost... I don't know if it's worse than not having the money to buy the dog flights, but it's definitely got a very depressing irony to it. to it that concerns me. And it reminds me of also like the little treat culture, which is this whole thing where it's like, you don't think that you can buy a house or get anywhere because everything's way too expensive.
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Chapters
8 chapters
1
What forces are shaping the economy for young Americans?
0:03–0:38
2
How are millennials redefining traditional spending patterns?
0:38–1:29
3
What is aspirational displacement and how does it affect spending?
1:29–2:50
4
How does financial nihilism impact consumer behavior?
2:50–3:49
5
What misleading economic indicators should we be aware of?
3:49–5:51
6
How are young Americans approaching investing in the stock market?
5:51–7:40
7
What role does sports betting play in the financial landscape for youth?
7:40–10:16
8
How can we navigate the noise in today's media landscape?
10:16–23:23
Speakers
3 identifiedMore from The Prof G Pod with Scott Galloway
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