Millennials Spend Less Because they Have Less: Fed

In recent years, slow home construction, declining new-car sales in the States and the poor performance of brick-and-mortar retailers have all been blamed on the "unique tastes and preferences" of those born between 1981 and 1997. That levels accusations against millennials of killing everything from canned tuna to the suburbs.

Actually, though, according to a new paper by the U.S. Federal Reserve, millennial habits are not so different from that of previous generations, "once the effects of age, income, and a wide range of demographic characteristics are taken into account."

Younger people are spending less because they have less money to spend, the Fed concludes.

Recent research has shown that the median millennial only has $2,430 in savings and that a growing percentage of millennials have absolutely nothing saved. In fact, that generation is still largely relying on Mom and Dad for help: A report from Country Financial reveals most American adults between the ages 21 to 37 receive financial assistance from their parents or guardians.

That need not mean they're bad at putting money away — it could mean they just have less to work with. In 2016, millennials had more in their retirement savings accounts than other generations at comparable ages, the Fed says, though that may reflect the replacement of pensions with defined-contribution accounts.

For example, adjusting for inflation, compared to college tuition in 1988, private school tuition in the U.S. in 2018 has increased 213% and four-year public school tuition has increased 129%. As a result, much of the generation is drowning in student loan debt.

Meanwhile, the average annual deductible for employer-sponsored health care plans was $1,505 in 2017, compared to only $303 in 2006, according to the Kaiser Family Foundation. Many younger Americans must resort to drastic measures to afford medical emergencies. Some have taken to raiding their retirement accounts, while others wait until they get a tax refund to access medical care they had been putting off, reports say.