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Millennials’ Future Spending Habits Bode Well for Four Industries

Millennials are changing what it means to be a consumer. They’re more likely to share a car than to own one, rent a home than to buy one and to invest in experiences over material goods.

It’s no wonder millennials avoid such big-ticket commitments: They came of age during the Great Recession, and many saw family homes subjected to foreclosure and their parents struggling to make ends meet. Those with a bachelor’s degree are also saddled with an average of $30,000 in student debt.1

But here’s the thing about younger generations: They get older. As millennials mature, their spending habits will mature with them—and four areas of the market stand to benefit.


1. Homes

In 2016, millennials were the largest group of U.S. homebuyers for the fourth consecutive year,2 suggesting the tide of homeownership is starting to turn. And with fewer affordable houses available—inventories have been falling for more than two years3—builders targeting first-time buyers are well positioned to capitalize on the trend.


2. Household durable goods

A 2017 study found that more than three in four millennials would rather spend their money on an experience than a material good.4 Be that as it may, if the home-buying trend among millennials continues, we’re likely to see a commensurate rise in spending on appliances, furnishings and other home goods.


3. Retail

It may come as a shock, but less than 10% of U.S. retail sales are made online.5 Millennials are sure to push that number higher, however, and the companies most likely to succeed are those with a foot in both the physical and virtual worlds—a transformation that’s already begun. Even as Walmart redoubles its online efforts with the purchase of, for example, Amazon is opening brick-and-mortar outposts—to say nothing of its acquisition of nearly 400 Whole Foods stores.


4. Automobiles

Today’s young adults rely on ride-sharing services more than any other age group.6 As families expand, however, cars become more of a necessity than a convenience, and carmakers that align with the generation’s commitment to energy efficiency are likely to benefit—as may driverless vehicles, which millennials are more likely than older generations to trust.7

The new normal

In short, despite their penchant for the experience economy, millennials are positioned to start buying and owning more as they move into the next stage of life. That said, we believe their influence on business and technology models will continue to help drive a revolution in consumer-spending habits—and the investment opportunities that come with them.

1Ben Miller, The Student Debt Review, New America, 02/18/2014.

2Home Buyer and Seller Generational Trends Report 2017, National Association of Realtors®, 03/07/2017.

3Jon Whitely, “Redfin Housing Demand Index Dipped in July as Inventory Shortage Deepened,” Redfin, 09/01/2017.

4The Experience Movement: How Millennials Are Bridging Cultural and Political Divides Offline, Eventbrite, 2017.

5Quarterly Retail E-Commerce Sales, 2nd Quarter 2017,” U.S. Census Bureau News, 08/17/2017.

6Aaron Smith, Shared, Collaborative and On Demand: The New Digital Economy, Pew Research Center, 05/19/2016.

7Marie Fazio, “Survey: Millennials More Likely to Trust Autonomous Cars,” The Florida Times-Union, 07/14/2017.

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All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers are obtained from what are considered reliable sources. However, their accuracy, completeness and reliability cannot be guaranteed.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.


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