• Badge

    A Decade of Revolution Declare Your Research Independence

Editor's Note: Anyone who has read his work can attest that Hedgeye demography guru Neil Howe is one of the brightest bulbs out there. In the brief bullets below, the man who coined the term "millennials" cuts through recent news headline noise and shares some observations on topics people are talking about across America.

Millennials Are 'Very Confident' About Investing (and 4 Other Demographic Trends) - emptymall

1. Morgan Stanley analysts predict that traditional brick-and-mortar retail sales will decline in Q4 2017, which would mark the first Q4 decline since 2008. While the holiday season is usually a boon for these retailers, several factors—such as the introduction of a pricey new iPhone and the continued advance of e-tail—may make this year an exception. (Morgan Stanley)

Neil Howe: We'll see. As the WSJ summarizes the case, conventional b&m retailers (MS defines away big-box stores and off-price retailers) will be kneecapped by 30 million iPhone X buyers (there goes $30 billion), higher gas prices, and the ongoing Amazon juggernaut. At least as important IMO is whether the hot September retail momentum (+1.7% MoM excluding food sales) continues. Not coincidentally, the personal savings rate in September just hit its post-GFC low (3.1%). Will belts tighten, or will Xmas be one more hell-with-tomorrow extravaganza?

Millennials Are 'Very Confident' About Investing (and 4 Other Demographic Trends) - selfie112

2. Fully 64% of Millennials say they’re “very or extremely confident” making investment decisions on their own—compared to only 47% of Xers and 39% of Boomers. With so much information at their fingertips thanks to the Internet, tech-savvy Millennials are able to do their due diligence before making any investment decisions. (Charles Schwab)

Neil Howe: It's not just lots of information--which can paralyze as easily as it can mobilize--but the way all the data is so well organized and can be accessed so easily on sites like Brightscope and FeeX. Millennial confidence also comes from expecting less from their investments. Boomers and Xers, who recall an era of plush double-digit total returns, always fret that they're just one great tip away from riches. No such FOMO for Millennials: They're resigned to saving more, at lower returns, to get where they need to be in their "target year." What's more, they don't mind ending up where all their friends end up, heads or tails, which gives today's passive index herding an extra push.

Millennials Are 'Very Confident' About Investing (and 4 Other Demographic Trends) - hipster1

3. Millennial contributor Sarah Kessler compares popular criticisms of her generation with criticisms levied against young Xers. Her analysis reveals that, as young adults, Xers were dismissed as entitled, lazy, feedback-craving, and reward-seeking—sound familiar? (Quartz)

Neil Howe: Superficially, all youth put-downs are alike because they are all predicated on universal phase-of-life differences. Of course, the young are always less experienced, less patient, less worn by care, and more willing to think outside the box of society's recent past. These sorts of complaints are timeless. If you look more closely at the particulars of the complaints, however, you notice that they shift markedly from one generation to the next. Back in the early '90s, older generations worried that Xers were fearless, edgy, undersocialized risk takers--disinterested in the team, only in themselves. Today they worry that Millennials are too cossetted, want too much feedback, and don't know how to take risks. And they love the team so much, they want to bury their own performance inside of it.

Millennials Are 'Very Confident' About Investing (and 4 Other Demographic Trends) - stack of cash

4. According to a new OECD report, Millennials have a higher average disposable income than previous generations had at the same age. While this distinction is far less prominent in the United States, this finding is a friendly reminder to Millennials paying off student loans or saving for a home that things could be worse. (OECD)

Neil Howe: Alas, yes, "far less prominent" in the United States indeed. The 35-member OECD average now includes Millennials in southern and central Europe plus Chile, South Korea, and Turkey. These Millennials are certainly doing better than their parents. But in the original EEC members plus the United States and Canada, Millennials show little or no real income gain over their parents' generations at the same age. (For the U.S. generational experience, see: "A Generational Perspective on Living Standards: Where We've Been and Prospects for the Future.")

Millennials Are 'Very Confident' About Investing (and 4 Other Demographic Trends) - old man

5. Contributor Ted Hesson argues that Boomers need immigrants to be home health workers as they enter old age. He suggests that the demand for home health care aides will explode thanks to fiercely independent Boomers who would rather age in place than move into a retirement community. (Politico)

Neil Howe: Up until about a decade ago, many liberals used to argue that more immigration was bad because it lowered wages for the unskilled. Today, as the Democratic Party aligns itself more fully around a pro-immigration platform, that argument has almost disappeared--either because unions have weakened to the point of irrelevance or because Democrats see more to gain from pulling in immigrants as voters. In any case, the outcome of this debate is unlikely to affect the trend in net immigration--which, as we have often argued (see: "The Changing Politics—and Reality—of U.S. Immigration"), is almost certain to trend down regardless of which party reclaims the White House or Congress. Thus, when in comes to home health, markets will simply have to adjust by raising pay for these workers: This will somewhat expand their supply and somewhat constrict their demand as some Boomers make other arrangements (like living with their own kids).

Millennials Are 'Very Confident' About Investing (and 4 Other Demographic Trends) - Email graphic   Cyber Monday