When it comes to money, it turns out millennials aren't that different than preceding generations, except for one major factor: They have much less of it.
Millennials have been blamed for "killing" a range of industries, ranging from country clubs to chain restaurants like Applebees, because of a supposed shift in generational shopping preferences. The idea even sparked a Reddit page called "Blame Millennials," where articles citing the death of various industries are posted. People in their 20s and 30s are also often caricatured as " " and otherwise wasteful with their money.
But millennials really aren't so different from previous generations when it comes to what they spend their money on, according to new research from economists at the Federal Reserve. Delving into data on consumer spending, the researchers found that the millennial generation has remarkably similar tastes as baby boomers and Gen Xers.
"We find little evidence that millennial households have tastes and preference for consumption that are lower than those of earlier generations, once the effects of age income, and a wide range of demographic characteristics are taken into account," the researchers wrote. "This conclusion also holds for spending on automobiles, food and housing."
Less income, more debt
Millennials took a hit by coming of age during the Great Recession, the economists wrote. It's left them with lower income, even though their household income hasn't changed much, which is likely due to a higher rate of millennial women who are working compared with women in previous generations.
That's not to say there aren't generational differences between millennials and older Americans. For one, they're more diverse and better educated than any other generation, while also holding the lowest marriage rates. But that's also been the case with past generations.
One clear difference, the study notes: Generation X and boomers enjoy family income that is 11 percent and 14 percent higher, respectively, than comparable millennial households today. Millennials also have higher student debt than Gen Xers.
In all, the typical millennial's net worth is 40 percent lower than that of Gen Xers circa 2001 and 20 percent lower than boomers in 1989, the researchers found.
To be sure, less income means less money to spend. But when millennials do open their wallets, they're generally spending on similar items as previous generations. For instance, the notion that young people are opting against buying cars isn't reflected in the consumer spending data -- 40 percent of millennials had an auto loan in 2017, compared with 36 percent of Gen X members in 2004.
A pricier roof
Millennials also spending about the same amount on food as baby boomers (although the researchers didn't break out spending on avocado toast).
Yet millennials are spending more on one big category: housing. That could be due to the rising cost of housing -- both buying and renting -- in the years since the recession.
Still, the findings may not be all that reassuring to industries that are feeling the squeeze from millennials' smaller budgets. Almost half of millennials have delayed buying a home, compared with 29 percent of the general population, according to a recent CUNA Mutual Group survey.
"Because millennials are still quite young as of this writing, it remains to be seen whether having reached adulthood during those unfavorable years will have permanent effects on their tastes and preferences," the researchers wrote.