The average inflation-adjusted net worth of a household headed by someone under 40 was about $174,000 at the end of 2019. That figure will increase by $85,000 to reach $259,000 by the end of 2023, CAP found.
Record-high inflation and rising interest rates throughout 2022 eroded wealth for the under-40 age group, which reached more than $280,000 in the first quarter of the year. But compared to before the pandemic, the wealth of young Americans appears to be on the rise, according to CAP’s analysis.
Struggles like buying a home, paying off student loans, and saving for retirement have plagued the financial outlook of many millennials and other young adults throughout their adult lives. But now Majority of Millennials Now that he’s in his mid-30s, he seems to be catching up.
The rapid increase in wealth among young Americans is due to a combination of factors, CAP research finds.
Here’s how much the average value of each asset owned by Americans under 40 increased between 2019 and 2023.
- Home equity (home value minus mortgage debt): $22,000
- Liquid assets (bank deposits, money market mutual funds): $9,000
- Personal business value: $10,000
- Assets (stocks, investment trusts): $31,000
- Durable consumer goods (automobiles, electrical appliances): $7,000
Additionally, these young households saw an average decrease of $5,000 in non-housing debt, including credit card balances and student loans, contributing to an increase in their overall net worth.
Rising home values have blossomed wealth for homeowners under 40 in four years. However, the homeownership rate for people under 40 also increased by an average of 1.5 percentage points between 2019 and 2023, the report said. Census Bureau data.
Some of the effects of the pandemic, such as suspending student loan payments and canceling travel and entertainment plans, may have helped young people pay down debt. increase cash savingsThe pandemic also caused a short but sharp recession, leading to market declines and the layoffs of millions of workers.
Although government intervention prevented the recession from becoming prolonged, few could have predicted that consumer wealth would recover so quickly compared to other recessions. CAP research shows that millennials recovered faster and stronger from the COVID-19 recession, when they were in their 20s to 40s, than older generations, who were in their late 20s to early 40s during the last recession. It is said that
According to CAP, baby boomers who were 26 to 44 years old at the start of the 1990 recession saw their wealth increase by just 46% after four years, adjusted for inflation. Gen I stayed.
The COVID-19 recession was significantly shorter than both the 1990 and 2007 recessions, officially lasting just two months, according to the National Bureau of Economic Research, and may have led to a significant recovery in millennial wealth. . The average wealth of millennials increased by about 101% from the end of 2019 to the end of 2023, after adjusting for inflation.
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