Are Millennials about to change the economy?

KEY IDEA: According to Bill Smead on CNBC “will prioritize “necessity spending” over the next decade and will soon start to move away from buying “Apple devices, craft beer, and Chipotle burritos” and instead spend their savings on big-ticket items such as houses and cars. I’m not so sure.

A fundamental shift in the spending habits of U.S. millennials will have an incredible impact on the world’s largest economy, according to the CEO of Smead Capital Management. U.S. adults aged between 21 and 38 years old will prioritize “necessity spending” over the next decade, Bill Smead told CNBC’s “Squawk Box Europe” on Monday. It comes after a 10-year period in which the same age group has “lived off discretionary spending.” He said this will mean young adults will soon start to move away from buying “Apple devices, craft beer, and Chipotle burritos” and instead spend their savings on big-ticket items such as houses and cars. “That will be a whole different ball game” for the U.S. economy, Smead said.

He’s missing some high points..

1ne: A lot of Millennials have no interest in buying home and, in some cases, cars. They like having the freedom to move from job to job without having to worry about selling a home.

2wo: Millennials aren’t too happy with home ownership as they see upkeep as a constant drain on finances.

3hree: Brands like Apple are not a luxury; they are an entitlement to millennials who can’t live with their gadgets.

4our: Craft beer is their beer of choice and is not necessarily more expensive than brands sold in stores. I don’t see any way a millennial would drink Budweiser.

The classic American dream of owning a home does not apply to millennials. They are under stress when it comes to their jobs and incomes. Some cities its actually prohibitive to buy a home because of home prices.

I’m sorry but I think he is way off base. I do believe millennials will try and save more money but that’s so they can retire rather than purchase big ticket items like a home and car.

Are Millennials about to change the economy?

About richmeyer

Rich is a passionate marketer who is able to quickly understand what turns a prospect into a customer. He challenges the status quo and always asks "what can we do better"? He knows how to take analytics and turn them into opportunities and he is a great communicator.

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