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Grown-Up Problems: Millenials Face Economic Hurdles

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A new report released by New York City comptroller Scott Stringer is prompting the rest of the country to take a closer look at how the Millennial Generation will affect the country’s economy in the years to come.

More than any other study on the same subject, Stringer’s report – titled, “New York City’s Millenials in Recession and in Recovery” – managed to effectively flesh out the financial travails of Millenials all over the country and reiterate the fact their plight will make a huge impact on the nation’s economy.

Millenial Identity
First off, just who are the Millenials?

There are no specific dates for when this generation was (for lack of a better word) spawned. Various studies tag them as the people born between 1980 to 2000.

With around 80 million members, the Millennial Generation has already surpassed the Baby Boomers as the largest living American generation. Economists estimate that they collectively spend $600 billion annually. “By 2020, they could account for $1.4 trillion in spending or 30% of total retail sales,” noted Laura Shin in her Forbes article, “How the Millennial Generation Could Affect the Economy Over the Next Five Years.”

In her 2015 report, Beth Ann Bovino, Standard & Poor’s U.S. chief economist, theorized, “If the economy continues to strengthen, as Standard & Poor’s projects, there’s potential that Millennials could start making big-ticket purchases that contribute to economic growth. On the other hand, their student loan debt could keep them from spending and not buying houses, costing the economy.”

“Two-thirds of GDP (gross domestic product) is consumption, so we rely on people spending money,” added Bovino.

Then again, Millenials’ spending power may continue to be hampered by several factors that are specific to their generation.
[buffet_recommended]

The New York Case Study
Stringer may have presented New York City’s Millenial crowd as a case study, but his observations apply to the entire country’s Millenial population. He wrote, “From 2007 to 2009, the nation suffered the worst recession since the Great Depression. During the same period, children of the Baby Boomer generation — a large population cohort known as the Millennials — began their working lives. Not since their grandparents or great-grandparents’ generation have young people entered adulthood during such adverse labor conditions.”

Jen Kinney, in her article, “New York City Has a Millennials Problem, presented an in-a-nutshell overview of the scenario that Stringer referred to. She noted: “The U.S. economy lost over 8.7 million jobs between 2008 and 2010, jobs not regained until early 2014. During those six years without net job creation, over 22 million Millennials entered their working years nationwide.”

Stringer pointed out that “the lingering impacts of the recession on this large group of young workers – and the national and local policies adopted to address their unique challenges – will reverberate through the national economy for decades to come.”

By the Numbers
As a result of the recession back in 2007 to 2009, many Millenials — even those with college degrees — were driven to take jobs in the so-called “low-wage industries.” It’s a trend that has persisted.

A report released by the Economic Policy Institute (EPI) explained, “Despite officially ending in June 2009, the recession left millions unemployed for prolonged spells, with recent workforce entrants such as young graduates being particularly vulnerable.”

EPI then revealed that for 2016’s college graduates, the unemployment rate is currently 5.6 percent and the underemployment rate is 12.6 percent.

Meanwhile, for young high school graduates, the unemployment rate is 17.9 percent and the underemployment rate is 33.7 percent.

EPI explained that “the high share” of unemployed and underemployed young college graduates and the share of employed young college graduates working in jobs that do not require a college degree “stems from the weak demand for goods and services, which makes it unnecessary for employers to significantly ramp up hiring.”

Bovino also warned that “continued low wages for Millennials could reduce U.S. GDP by as much as $244 billion through 2019, or $49 billion a year, relative to our baseline scenario.”

Student Loans

Further complicating Millenials’ economic predicament are their massive student loans.

As Bovino stated out in her commentary on Fortune: “Millennials are the most educated generation in American history, but it has come at a cost ranging in the hundreds of billions of dollars. Indeed, many of Millennials’ spending and saving habits can be attributed to this debt – a major determinant of current and future spending ability, given the length of loan maturities and weak post-recession wage growth to date.”

An online survey conducted online in February 2016 by research agency TNS on behalf of Citizens Bank revealed that Millennials “have an average student debt of $41,286.60.” This is higher than the national average amount of debt for college graduates, which the Department of Education determined as $29,400.

The survey also highlighted the fact that “59 percent of those polled have “no idea” when they will be able to pay back their student debt.”

What the Future May Hold

Although it may seem that Millenials have a lot of economic hurdles to deal with, there is still hope for some relief. “In the end, while the burden of student debt will eat into the purchasing power of many young Americans for some time, we expect the continuing recovery in the U.S. economy to afford this generation the eventual opportunity to transition into the traditional definition of full adulthood — and, in a virtuous circle, begin to buy the houses, cars, and other big-ticket items that will further stimulate economic growth,” Bovino said.

Millenials themselves should also be proactive and urge lawmakers to come up with national policies that will give them a much needed boost out of the economic rut that they’re in. In this endeavor, the fact that they are “the largest living American generation” could be their most valuable asset. They can be a formidable political force. In this case, there is strength in numbers.

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Economy

STUDY: Number of Billionaires Doubles in Last Decade

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Number of Billionaires Doubles in Last Decade
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The number of billionaires has doubled in the past decade and the world’s wealthiest 2,153 people controlled more money than the poorest 4.6 billion combined last year, the charity Oxfam said Monday.

Meanwhile, unpaid or underpaid work by women and girls adds three times more to the world’s economy each year at least $10.8 trillion than the technology industry, the Nairobi-based charity said in its “Time to Care” report.

Women around the world work 12.5 billion hours combined each day without any pay or recognition, while the world’s 22 richest men have more wealth than all the women in Africa.

“It is important for us to underscore that the hidden engine of the economy that we see is really the unpaid care work of women. And that needs to change,” Amitabh Behar, CEO of Oxfam India, told Reuters.

“Our broken economies are lining the pockets of billionaires and big business at the expense of ordinary men and women. No wonder people are starting to question whether billionaires should even exist,” Behar said ahead of the annual World Economic Forum in Davos, where he will represent Oxfam beginning Tuesday.

“Women and girls are among those who benefit least from today’s economic system,” he added.

There will be at least 119 billionaires worth about $500 billion attending Davos this year, according to Bloomberg, with the highest contingents coming from the US, India and Russia.

“The very top of the economic pyramid sees trillions of dollars of wealth in the hands of a very small group of people, predominantly men,” the Oxfam report said.

“Their wealth is already extreme, and our broken economy concentrates more and more wealth into these few hands,” it said.

To highlight the inequality, Behar cited the case of a woman called Buchu Devi in India who spends up to 17 hours a day walking almost two miles to fetch water, cooking, preparing her kids for school and working in a poorly paid job.

“And on the one hand you see the billionaires who are all assembling at Davos with their personal planes, personal jets, super rich lifestyles,” he said.

“This Buchu Devi is not one person. I in India encounter these women on a daily basis, and this is the story across the world. We need to change this, and certainly end this billionaire boom.”

Behar said that to remedy the problem, governments should make sure above all that the rich pay their taxes, which should be used to pay for amenities such as clean water, health care and better schools.

“If you just look around the world, more than 30 countries are seeing protests. People are on the street and what are they saying? That they are not to accept this inequality, they are not going to live with these kind of conditions,” he said.

Source: New York Post
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(c) 2020 2019 Vanguard Media Limited, Nigeria Provided by SyndiGate Media Inc. (Syndigate.info).

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Automobiles

Pump Prices to Edge up After Attack on Iranian General, but Long-Term Effect Unclear

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By Jeff Ostrowski, The Palm Beach Post, Fla.

Motorists soon will see the effects of President Donald Trump’s decision to kill a prominent Iranian general. Whether pump prices rise a little or a lot depends on how quickly international tensions intensify.

Florida gas prices climbed an average of 7 cents a gallon in the past three days and could increase an additional 5 cents, AAA – The Auto Club Group said Monday.

The 7-cent increase was coming even before the U.S. air strike Thursday that killed Iranian Maj. Gen. Qassem Soleimani. That hike was a result of a rise in the price of crude oil in December.

News of the targeted killing of Soleimani sent crude oil surging nearly $2 per barrel on Friday. An increase of that magnitude typically translates to a 5-cent hike at the pump, AAA said.

The U.S. benchmark for crude oil traded Monday just above $63 per barrel, the highest level since May 2019. The price of oil makes up about half the price of a gallon of gas.

“What happens in the Middle East can have a direct impact on Americans’ daily lives by influencing what they pay at the pump,” said AAA spokesman Mark Jenkins. “Crude prices rise when there’s a threat of war, because of concerns over how the conflict could hamper supply and demand.”

Oil analyst Tom Kloza of energy firm OPIS agreed that pump prices in Florida likely will rise about 5 cents a gallon in the coming days.

“Then I have a hunch that things are going to calm down,” Kloza said Monday. “I don’t think we’re looking at $3 gas.”

The national average pump price Sunday was $2.585, while the Florida average was $2.526, AAA said.

Kloza expects only modest increases in part because of the timing of the attack. January is always a slow month for gas consumption in the United States.

There’s also the reality that sanctions leave Iran unable to export oil. Complicating the calculus is Iraq’s response to the U.S. attack. The drone strike on Soleimani took place in Baghdad, and some Iraqi politicians considered the assault an affront to Iraqi sovereignty.

While there’s no Iranian oil supply to be disrupted by a war, Iraq is an important producer.

Trump keenly watches oil prices and realizes that a price spike might erode his support in this year’s presidential election, Kloza said.

At the same time, Kloza added, “This president has proven to be unpredictable.”

Trump’s response has been typically uneven. Delivering an official statement at the Mar-a-Lago Club in Palm Beach, Trump’s tone was measured. He said the targeted killing was designed to pre-empt Soleimani’s planned attacks on American diplomats and soldiers.

“We took action last night to stop a war,” Trump said Friday. “We did not take action to start a war.”

However, over the weekend, Trump took to Twitter to threaten attacks on Iranian cultural sites.

“The United States just spent Two Trillion Dollars on Military Equipment,” Trump wrote Sunday on Twitter. “We are the biggest and by far the BEST in the World! If Iran attacks an American Base, or any American, we will be sending some of that brand new beautiful equipment their way…and without hesitation!”

##IFRAME_1##Iran has vowed vengeance, but military experts say the nation isn’t powerful enough to wage a direct war against the U.S.

“It’s still far too early to know how much of an impact this conflict will have overall on prices at the pump,” AAA’s Jenkins said.

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Economy

Stocks Rally Despite Impeachment News

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Stocks rose on Thursday as investors looked past the news of President Donald Trump’s impeachment as well as mixed U.S. economic data.

The Dow Jones Industrials advanced 53.85 points to begin trading at 28.293.13

The S&P 500 recovered 4.93 points to 3,196.07

The NASDAQ added 19.39 points to Wednesday’s all-time record, at 8,847.12.

The S&P 500 is up nearly 7% since House Speaker Nancy Pelosi launched a formal impeachment inquiry in September.

Cisco Systems was the best-performing Dow component, rising 1.6%. The consumer staples and real estate sectors led the S&P 500 higher, gaining 0.4% each. Micron Technology shares also contributed to Thursday’s move higher. Conagra shares surged more than 14% and were on pace for their biggest one-day gain since Oct. 16, 1989.

Micron shares climbed 3.5% on the back of strong quarterly results. The chipmaker posted earnings per share and revenue that topped analyst expectations.

On the economic data front, weekly jobless claims fell to 234,000 from 252,000 the week before. However, economists expected claims to fall to 225,000.

Meanwhile, the Philadelphia Federal Reserve’s business conditions index fell to 0.3 in December from 10.4 in the previous month. Economists expected the index to slip to 8.

The Democrat-led House of Representatives voted Wednesday to impeach Trump for abuse of power and obstruction of Congress. Trump became only the third president to be charged with high crimes and misdemeanors and will now face a trial in the Republican-controlled Senate.

Prices for the 10-Year U.S. Treasury were lower, raising yields to 1.94% from Wednesday’s 1.93%. Treasury prices and yields move in opposite directions.

Oil prices gained seven cents to $61.00 U.S. a barrel.

Gold prices moved forward $1.80 at $1,480.50 U.S. an ounce. Copyright © 2019 Baystreet.ca Media Corp. All rights reserved.

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