A lockdown lift and a rising vaccination rate have put the United States on the on the verge of an economic boom, but Americans must spend to help such a recovery take off. Rich millennials can be the ones leading the way.
A new report from McKinsey & Company found that discretionary spending is already on the rise, and more than half of U.S. consumers plan to spend more on splurging or healing. High-income millennials plan to spend the most.
This makes sense considering that millennials are America’s greatest generation and have the greatest purchasing power, and that the rich got the best of K-shaped recession in the United States. To be rich and a millennial puts a person in a privileged position to spend, especially since part of this cohort had saved up to $ 3,000 per month during lockdown Last year.
One industry that affluent millennials plan to spend is travel. A new survey from Accenture and TripAdvisor have found that high-income millennials are most likely to spend a lot on travel this year, featuring the highest rate of luxury bookings (trips of at least $ 5,000) of any other generation studied.
It’s up to the rich to help revive the economy
This is up to high incomes to help drive the economy forward.
Consumer spending makes up 70% of the US economy, half of which comes from the richest 10% of US households, according to estimates by Goldman Sachs and Deutsche Bank, respectively. This means that about a third of America’s GDP comes from spending by the richest 10%.
High-income households are “key to stimulating the recovery in consumption,” as UBS strategist Keith Parker wrote in a March memo. Those who earn more than $ 80,000 a year expect to increase their spending more than low- and middle-income earners, according to a UBS Tracking Note.
Americans are currently sitting on $ 2.6 trillion in surplus savings, according to data from Moody’s Analytics. Almost two-thirds of excess savings in the United States are found in the households of the richest 10% of the income distribution and three-quarters in the richest 20%.
But this unequal The share of savings accumulated during the pandemic would limit an even larger spending boom, Mark Zandi, chief economist at Moody’s Analytics, said in a note. âMuch of the excess savings has been made by high-income and wealthy households who are likely to treat savings more as wealth than income, and will therefore spend much less, at least not quickly,â writes -he.
The intention to spend rich millennials is therefore a good sign. It is necessary to fill the void left by the pandemic in the economy.