• A recent Gallup poll found 18-t0-29 year olds today spend nearly $20 less daily than their 2008 counterparts.
• Young adults reported spending less on discretionary items and more on necessities.
• This could pose a long-term problem for retailers who obsessively market toward millennials.
American millennials aren't spending as much money on clothes, avocado toast, and pumpkin spice lattes as you may think.
Instead, they're shifting their spending to focus on necessities, as housing costs increase and wages sit still.
According to a recent Gallup poll, 18-t0-29 year olds in 2016 reported spending an average of $19 less on a given day than their 2008 counterparts.
This could pose a problem for some retailers whose marketing efforts aimed at millennials have become obsessive in recent years.
Twenty-somethings say they spent less money on the whole in 2016 than the year before, and their paycheck is now going toward healthcare, utilities, and groceries, rather than discretionary items, like dining out, leisure, and travel, according to the poll.
Gallup suggests a few reasons for the shift in spending among 20-somethings, including:
- The average student loan borrower in 2016 graduated with a record-breaking $37,000 in debt.
- More young people are living with their parents than ever before, decreasing their spending on household items.
- Fewer 20-somethings were married in 2016 (18%) than in 2008 (27%) — married couples tend to spend more, thanks to dual incomes.
- Fewer 20-somethings had children in 2016 (21%) than in 2008 (30%) — those with children reported spending $29 more, on average, daily.
- The share of young people who report comparing prices for the best deals or buying used goods has increased considerably — even if they're still buying things, they're spending less overall.
Gallup reports that since the recession, sluggish growth in consumer spending — which accounts for about two-thirds of America's GDP — may be due to these changing habits, considering young adults are responsible for 28% of all daily, per-person consumer spending.
"Many industries will need to re-evaluate the important young adult demographic to determine the best way to gain a larger piece of a shrinking pie," write Gallup reporters Sean Kashanchi and Jeffrey M. Jones. "This may be especially true for retail if younger consumers continue to price shop, purchase goods online, and spend less on discretionary items."
But just because young people are spending less on certain items doesn't mean they're saving more — even though 20-somethings are just as likely as older people to report a preference for saving over spending, according to Gallup.
In fact, nearly half of millennials are saving 5% or less of their income, while only 16% are saving more than 10%.
