Two days ago The Fiscal Times published a very scary story called, “Millennials Young, Broke and Spending on Luxury.” It appears the ‘millennials’ generation (those born between 1980 and 2000) not only make up the highest unemployment rates in the country, but are burdened with large student loans and underemployment. Yet, they are the fastest growing segment of luxury goods and services purchasers. Does that make any sense?
According to a February report by American Express Business Insights, millennial consumers increased their spending on premium luxury fashion by 33% in 2011 over the prior year. They are fast outpacing every other demographic, including boomers, which increased luxury spending by only 19% in comparison.
Millennials are effectively turning to flash sales and daily deals to get luxury goods at a bargain. They are also know to trade up and down in discretionary categories (like eating Ramen for a week…wait I do that!). The goal is to be perceived as having “made it’ even when they haven’t.
While their boomer parents didn’t grow up with the latest gadgets, millennials are “constantly bombarded with the latest and greatest electronic gadgets, and they’re also subject to more peer pressure regarding the ownership of these items,” says David Bakke, editor of Money Crashers Personal Finance.
This begs the question: where is the money coming from? Credit cards and money from their parents? It appears so. By 2030, millennials are expected to outnumber boomers by 22-million, which should be when they are at their peak earning and spending years. With their established preference for luxury goods, this will likely mean a significant acceleration in their purchases in this segment.
Source: The Fiscal Times
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