Millennials are being rightly described as the nation's second Baby Boom. The first one produced around 81 million consumers, but this second one clocked in at almost 85 million in the 2010 Census. Between them, of course, is the much smaller Generation X with a census count of only 41 million consumers.
But let's be fair. The reason Gen X is that small is that at Census time in 2010 we confined them to the ten year age cohort 35 to 44, while Baby Boomers populate the twenty year age 45 to 64 cohort and, for equal comparative purposes Millennials are defined as the twenty year age 15 to 34 cohort.
By a fortunate coincidence of decennial census schedules we can now compare the first born or Early Millennials who were ages 25 to 34 in 2010 with Generation X who were ages 25 to 34 in 2000 and with the youngest (aka Late) Baby Boomers who occupied that same age cohort at the time of the 1990 Census.
The table below shows how all or part of the three generations occupied the 25 to 34 age cohort for the last three Census counts.
The first thing we notice is that Generation X really was smaller with about 3.3 million fewer consumers ages 25 to 34 than Boomers that age ten years earlier. But there were also about 2.1 million fewer Early Millennials ages 25 to 34 in 2010 as there were Late Baby Boomers that age twenty years earlier.
The two twenty year cohorts are different sizes because both baby booms were back loaded. In 1990 for example, there were 43.2m Late Boomers ages 25 to 34 but only 37.4m Early Boomers ages 35 to 44 *. The 2010 Census counted 43.6m Late Millennials ages 15 to 24 compared to only 41.1m Early Millennials ages 25 to 34.
The second thing to notice is the larger Millennial household size compared to either of the other two generations. This is but another indicator of how many Millennials have not yet left their parent's home. If they had been forming households at the same rate as their predecessors there would have been close to 19 million households headed by 25 to 34 year olds in 2010, not the 18 million actually counted.
Another way to compare there three generations is to look at the differences in their household consumer behavior when each of them were ages 25 to 34. For this we turn to Bureau of Labor Statistics (BLS) annual Consumer Expenditure Surveys. Note: 20 years later there were 45.0 million Boomers ages 45 to 54 but just 36 .5 million Boomers ages 55 to 64.
Those surveys have been conducted annually since 1984 and the BLS provides tabulations of the average dollar amount US households (they call them "consumer units") spend each year on a wide array of goods and services. To eliminate the effect of inflation when comparing spending for previous years the 1990 spending amounts were multiplied by 1.617 and 2000 spending by 1.266 to make all comparisons of spending between the three years in constant 2010 dollars.
What this data shows is that on average Baby Boomer and Millennial households ages 25 to 34 spent very close to the same total amounts in 2010 dollars: $45,465 for Boomers in 1990 versus $46,617 in 2010 for Millennials, only 2.5% more. But Generation X spent the most: $49,300, but because of their smaller number of households their total aggregate spending was the smallest.
The big difference came in how much more or less each generation spent on various product categories. We didn't need the BLS to tell us that three big things were far less expensive in 1990 that then were in 2010, even after adjusting for inflation: housing, healthcare and education. As a result Baby Boomers in 1990 were able to spend less on those items and thus have more to spend on other goods and services.
Most households (about 55%) of all three generations were renters at this age so the rising cost of rent is more important than the cost of owning a home. In the aggregate Millennials spent $21.0B more for rent in 2010$ than an equal number of Baby Boomer households and Gen X households spent $9.5B more.
For the minority of Millennials who bought a home recently, home prices and mortgage rates have declined sharply over the past five years, but one aspect of home ownership is still rising fast. The total expense of owning a home rose only 9% in constant dollars, but spending on property taxes more than doubled from 1990 to 2010. That alone added an aggregate $12.4B to Millennial homeowners costs.
Increases in the cost of health insurance and education also cut into Millennials ability to spend on other things. They spent $9.2B more than Boomers on health insurance and $6.3B more on education, not including the expense of paying back their students loans. Generation X also paid more, but not as much as Millennials: $3.4B more than Boomers for health insurance and $4.1B more for education.
Since Millennials and Generation X spent so much more for those three important items, they had less to spend on other things.
It looks like when faced with higher costs of housing, healthcare and education, Millennials reduced their spending on a wide array of spending categories. But for most goods and services Generation X did not spend less than Baby Boomers, perhaps in large part because their income was higher, but also because they were ages 25 to 34 in 2000, seven years before the Great Recession began.
If the timing of one's birth is an event of major consequence, then clearly Millennials drew the short straw. For those ages 25 to 34 in 2010 their real median household income was not materially higher than that of Boomers in 1990 and a full 11% below than Generation X in 2000, according to Census Bureau annual surveys.
One question this raises is what will happen to these Millennials between now and 2020 when they will be 35 to 44 years old. Here's one possibility. As the Great Recession resolves into a reasonably robust economy, it's likely that given their higher levels of technology skills Millennials will as a group draw much longer economic straws and start spending more like their predecessors were able to do.