via My Budget 360
Young Americans are having a tough time in this economy when it comes to pursuing their own version of the American Dream. New data highlights that many young adults are still living with their parents deep into adulthood and this is largely being driven by economic reasons. This is all happening during a time when the stock market is at a record high, housing values are up, and the employment rate appears to be healthy. So what gives? What gives is that many young Americans while having work, are not making enough to save for a home and are stuck having to pay off a mountain of student loan debt. Student loan debt now sits at $1.53 trillion officially but this data is old and we are racing to $1.6 trillion. Young Americans are having a failure to launch moment because many are already carrying mini-mortgages before jumping out of the nest.
The struggles of young Americans
You would expect that with the booming economy more young Americans would be out living on their own away from their parent’s discretion. Yet we are still seeing record levels of young adults living at home with their parents.
Finally some updated information is out regarding young household formation and we are seeing that for young Americans many are still living at home at record rates:
Nearly one out of three 18-34 year olds are living with parents. You can see from the chart above that the Great Recession did cause some sort of generational shift. This is not typical for this generation. Something is going on that is beyond the headlines of the economic recovery.
What is going on is multi-faceted but one major albatross that young adults are carrying is student loan debt. Student loan debt is now the second largest class of debt in America only behind mortgage debt. Just take a look at how quickly student debt has spiraled out of control:
In ten years we’ve added more than $1 trillion in student debt and it doesn’t seem to be slowing down. We now know that one big campaign topic for this year is going to be student debt and how we are going to address it. Something has to give and household formation is being stunted because millions of Americans are left paying mini-mortgages on student loans.
America needs to wrestle with the idea of halting a generation of young adults because we are now living in an era of rampant debt usage. This excessive usage of debt is happening in all forms:
In total there is more than $74.5 trillion in debt in America:
At this rate it is shocking we don’t all live at home with parents. Ultimately this path is unsustainable and something is going to have to give. All is fine so long as debt is accessible but there is always a day of reckoning with these type of situations. If you remember, the Great Recession was largely a liquidity crisis driven by the inability to service debt similar to someone being unable to pay their bills and having to go bankrupt.