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Generation Y faces a new economic reality

Generation Y.

Generation Y-Not?

That play on words reflected the optimism that greeted the earliest members of Generation Y when they began taking their places in the economy in the late 1990s.

Economists, analysts and marketers greeted them with lofty adjectives: self-sufficient, responsible, mature and, yes, optimistic. And marketing and media savvy, environmentally aware, technologically literate, willing to spend money yet cautious of "empty" brands. And used to having options.

If you're part of this generation, you supposedly grew up with a greater degree of affluence than any generation before and are the most educated generation yet. Your parents and schoolteachers treated you as if you were too precious to fail, rewarding you for any accomplishment, no matter how small.

(With both parents working outside the home, you received four times as many toys as kids 20 to 30 years ago.)

Born roughly between 1977 and 1997, you are 80 million strong — compared with the preceding Gen Xers at 46 million.

Your purchasing power and overall eventual impact on society will rival that of your baby boomer parents and bosses, who number 76 million.

Now hit pause.

And rewind the tape.

Back to around 2000.

Instead of the smooth glide upward, you've lived through the dot-com bust, the Florida election recount, Sept. 11, Afghanistan, Iraq and Afghanistan again. Global warming became a nightmarish vision. The housing and stock markets imploded. Huge Wall Street firms collapsed. The government devoted massive amounts of money to bail out the banks and the car industry. The Great Recession dried up jobs.

All this just as you launched careers, started buying houses and saving money and possibly began investing in the stock market.

Many, including members of Generation Y, are taking account of the changed outlook.

Most of the angst focuses on the economy. Good luck if you're a recent Generation Y college grad trying to get a job.

In a survey by Seventeen magazine and Bank of America, about 65 percent of teens said the recession had forced a change in their spending habits. Four in 10 have had to change their college plans.

Older Generation Y members worry about their long-term finances. In one survey, 45 percent said they had no savings.

That's going to be particularly important. A Wall Street Journal article pointed out that under current assumptions, the Social Security trust fund will be exhausted by 2039, the year the first of Generation Y will turn 62.

Because of the beating the markets administered to investors recently, Prudential investment adviser George Barnes worries that some in Generation Y, besides not having the patience to invest long-term in stocks because they've lived in an "instant gratification" culture, just don't believe in the markets.

"Authority is questioned more often now," he said. "That kind of mentality carries over in your investments. What is missing that was very prevalent for that older generation is trust."

One Internet commenter, Jo Owen at bnet.com, titled his article "Poor Generation Y-me." He points out that Gen Y will have to deal with looming pension shortfalls, unprecedented levels of government debt, possible inflation, the end of the carbon energy age, and globalization.

And that all the while the huge baby boomer generation will do its best to keep political control and tilt things its way.

In a recent U.S. News article, Generation Y was advised to downgrade expectations, along with this advice: Don't compare yourself to your parents. Appreciate what you have. Steer clear of debt. Get creative with living arrangements.

All generations have their obstacles, some more than others, and have to change their youthful dreams. Generation Y will cope, but members of older generations will also have to adjust. In the short term, its challenges are all our problems.

Businesses will have to recalibrate how to market to them, hire them and manage their careers. Our political leadership, now led by baby boomers, will have to help them solve their problems in a way that's fair to all generations.

Members of Generation Y will still be able to fall back on the positive attributes they were raised with. And those who lived through the last decade's events and are struggling with the current recession will regain an earlier optimism.

Generation Y faces a new economic reality 10/03/09 [Last modified: Saturday, October 3, 2009 4:30am]
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