Millennials – 21 to 34 year-olds – comprise 22 per cent of the US population and are the largest working-age cohort. However, they are not just younger, they consume and invest very differently to older groups, making them not only important to current spending and saving patterns, but a key driver of future trends.
We’ve surveyed 2,000 US consumers and found the millennium age group are more likely to adopt disruptive technologies than their elders, are more optimistic about the economy, and are more adventurous investors.
US millennials are more concerned than older generations with environmental, social, and governance factors when buying goods – and when investing. Indeed, they are more likely to choose investments by themes such as cleantech or automation.
And 30 per cent said they would invest in crypto-currencies in the next three years – more than plan to buy bonds. That compares with just 3 per cent of baby-boomers, the 51 to 65 year-olds. But will younger people, impressed by past high profits, then buy funds only marginally outperforming the stockmarket, or will they seek riskier leveraged products? These young US adults are already more likely to invest abroad, especially in Europe.
Debt is a serious concern for millennials. Outstanding student loans exceed USD1.3 trillion, equivalent to nearly 7 per cent of the GDP compared with 2 per cent in 2003. Repayments could depress long-term consumer spending and hurt the US economy and millennials could also find it harder to borrow to become home-owners.
But baby-boomers have record wealth to pass to their children, potentially allowing millennials to accumulate more debt at an earlier age. And young Americans are more optimistic about the economy: over 32 per cent were ‘very optimistic’ about the next 12 months and nearly 45 per cent expected their wages to grow by 3 per cent or more.
Even if younger consumers have less current purchasing power than their elders, they were more confident about increasing their spending. Some 43 per cent said they would spend more over the next year. Among 35 to 50 year-olds, only 31 per cent proposed to spend more, and for baby-boomers, just 15 per cent.
And millennials are least likely to save any additional income, including the current tax cuts. Instead they are more prone to spend on experiences such as restaurants or travel, or buy big-ticket items such as TVs or cars. Most US millennials expect to travel abroad at least once a year over the next five years.
Some 40 per cent of millennials visit e-commerce platforms at least once a day and as they age and their income grows, they will spend more online. This age group claims to spend up to half their time on smartphones or social-media sites, and more than 60 per cent say they would be comfortable in a self-driving vehicle, compared to just 22 per cent of baby boomers.
- Some 2,000 US consumers in 49 states were surveyed in December 2017 for HSBC: half living in California, Florida or New York. Of them, 30 per cent were aged 21 to 34 with 34 per cent aged 35 to 50 and 34 per cent aged 51 to 65. They split 62 per cent female and 38 per cent male; 61 per cent were married, 13 per cent divorced or separated and 23 per cent single. Some 70 per cent were working.
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The following analyst(s), economist(s), or strategist(s) who is(are) primarily responsible for this report, including any analyst(s) whose name(s) appear(s) as author of an individual section or sections of the report and any analyst(s) named as the covering analyst(s) of a subsidiary company in a sum-of-the-parts valuation certifies(y) that the opinion(s) on the subject security(ies) or issuer(s), any views or forecasts expressed in the section(s) of which such individual(s) is(are) named as author(s), and any other views or forecasts expressed herein, including any views expressed on the back page of the research report, accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Ben Laidler
Equities: Stock ratings and basis for financial analysis
HSBC and its affiliates, including the issuer of this report (‘HSBC’) believes an investor's decision to buy or sell a stock should depend on individual circumstances such as the investor's existing holdings, risk tolerance and other considerations and that investors utilise various disciplines and investment horizons when making investment decisions. Ratings should not be used or relied on in isolation as investment advice. Different securities firms use a variety of ratings terms as well as different rating systems to describe their recommendations and therefore investors should carefully read the definitions of the ratings used in each research report. Further, investors should carefully read the entire research report and not infer its contents from the rating because research reports contain more complete information concerning the analysts' views and the basis for the rating.
From 23 March 2015 HSBC has assigned ratings on the following basis:
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