As the market has taken a beating once again this week, there are already signs that it will impact the consumer. Higher borrowing costs are showing signs that the new car industry will slow down by July as buyers, particularly in the millionaire and above category are looking to delay new auto purchases.
A CNBC survey reported on Thursday that millennials were three times more likely to cut back on large purchases compared with baby boomers. Millennials have helped fuel the housing market after being sheepish compared with previous generations, but inflation may cause them to retrench.
Inflation has historically hurt the working class and middle class more than the affluent, but gas prices for instance are impacting younger consumers.
The last time the United States had a major inflation problem, a high percentage of the present workforce was either too young to remember or had yet to be born. As the summer begins, the impact on vacations and dining out could be devastating only a few months after optimistic projections due to the end of the Covid epidemic and market optimism.
Millennials are also heavily invested in Cryptocurrencies, which have fallen to two year lows, with a swift decline of more than 50%. Sharp declines in a certain asset class can have a psychological impact on consumers.
If there is a silver lining, millennials are optimistic that inflation is a temporary problem, and that the economy will strengthen at the end of 2022 and into 2023. Let’s hope.