Are Young People Screwed?
Timestamps are as accurate as they can be but may be slightly off. We encourage you to listen to the full context.
Podcast Summary
This episode explores whether today's economy is truly stacked against young people, examining their frustrations around housing, employment, and financial prospects. (01:42) Host Derek Thompson discusses the concerning fact that young people aged 18-34 recorded their most negative economic sentiment in over 40 years of surveys, with the average first-time homebuyer age hitting 40 years old - a decade higher than just ten years ago. (02:36) However, guests Michael Batnick and Ben Carlson provide nuanced counterpoints, revealing that while housing markets are historically challenging, many young people are investing in stocks at unprecedented rates, with holdings rising 300% since 2020 among those under 40. (25:41)
- Main Theme: The episode examines both sides of the "young people are screwed" narrative, exploring housing challenges, job market difficulties, AI's impact on employment, and the surprising ways young people are building wealth through stock market investments rather than traditional homeownership.
Speakers
Derek Thompson
Derek Thompson is a staff writer at The Atlantic and host of the Plain English podcast. He writes extensively about economics, technology, and culture, with a particular focus on how technological and economic trends affect American society.
Michael Batnick
Michael Batnick is the co-host of the Animal Spirits podcast and Director of Research at Ritholtz Wealth Management. He's known for his data-driven approach to financial markets and economic commentary, frequently analyzing investment trends and market behavior.
Ben Carlson
Ben Carlson is the co-host of the Animal Spirits podcast and author of several books on investing and personal finance. He works as a portfolio manager and is known for his practical, long-term approach to wealth building and financial planning.
Key Takeaways
Housing Market Forces Young People Into Stock Investing
The housing crisis has created an unexpected wealth-building opportunity for young people who are priced out of homeownership. (25:26) Among Americans earning $30,000-$80,000, 54% now have taxable investment accounts, with half entering the market in just the last five years. Young people under 40 have seen their stock holdings rise 300% since 2020, while 37% of 25-year-olds now use investment accounts compared to just 6% in 2015. This shift represents a fundamental change from previous generations who bought homes first and invested later - today's young people are building wealth through markets while renting longer.
AI Is Creating Unequal Opportunities Within Generations
Rather than uniformly harming all young people, AI is creating unprecedented inequality within the same generation. (18:39) As Ben Carlson noted from speaking with college professors, there will likely never be more inequality within a single generation than what's emerging now. Young people who learn to effectively use AI tools will thrive, while those who don't adapt risk being left significantly behind. This creates a bifurcated future where some young people achieve extraordinary success while others struggle more than previous generations.
Youth Unemployment Context Reveals Historical Normalcy
While youth unemployment appears alarming at first glance, historical data shows current conditions are relatively normal. (09:24) Michael Batnick pointed out that the current unemployment rate for 22-27 year olds is 7.4% versus 4% overall - a 3.7% spread that's actually better than the historical average of 3.8% since 1990. During the guests' own graduation years, youth unemployment reached 16%. This suggests that while job hunting is challenging for young people, it's not historically unprecedented.
Corporate Margin Expansion Despite Economic Headwinds
Companies have demonstrated remarkable resilience by actually improving profit margins during recent economic challenges. (44:56) Despite facing the pandemic, supply chain disruptions, 9% inflation, and rapidly rising interest rates, S&P 500 companies increased their average margins from 8.8% in February to 10.3% in the 2020s. Large corporations with access to cheap capital were insulated from higher interest rates that affected individual consumers, allowing them to protect bottom lines while maintaining strong cash flow generation.
Narrative Awareness Is Critical for Personal Success
Young people must resist becoming trapped by generational victim narratives while still acknowledging real challenges. (47:46) Michael Batnick emphasized the importance of rejecting overly negative narratives that, while containing kernels of truth, can create a "negative vortex" that prevents personal progress. The advice is to focus on individual actions and improvements rather than identifying primarily with generational statistics, while still recognizing that negative narratives can shape real-world outcomes including political elections and market movements.
Statistics & Facts
- The median age of first-time homebuyers hit 40 years old, representing a 10-year increase from just a decade ago and comprising only 21% of all home purchases - the lowest share on record. (04:50)
- Housing prices increased 50% in the current decade alone, while mortgage rates doubled, creating unprecedented affordability challenges for new buyers. (05:00)
- Among Americans earning $30,000-$80,000, 54% now have taxable investment accounts, with half entering the market in the last five years, and people under 40 seeing their stock holdings rise 300% since 2020. (25:41)
