FIU has climbed the ranks of colleges across the nation, making them a serious contender in academia. The school has just released new economic data that shows a significant spending gap between the generations in America.
According to FIU economist Hakan Yilmazkuday, there could be multiple reasons for the generation spending gap. A professor of economics in the Steven J. Green School of International & Public Affairs, Yilmazkuday breaks down what might be the main driver between this difference.
Income and market prices are cited as being the two main causes of spending gaps, and with each generation enduring their respective walk of life, there are bound to be differences in how these two categories implicate the finances of Americans. In terms of income, many Baby Boomers are getting Social Security payments, which are adjusted with respect to the inflation rate, but younger generations may not get any inflation adjustment in their salaries
For prices, the cost of living may be higher for younger generations, as a lot of job opportunities are present in larger cities where rent and property taxes are higher. On the other hand, senior citizens retire to largely convenient areas that are more rural, like Florida.
Additionally, a group like Baby Boomers has already gone through the motions of buying a home, raising a family, or investing in their career. Any major purchases for the older generation could be limited to medical expenses or leisure activities. Younger ages face an entirely different financial landscape that features unique hurdles of the times, such as student loans to pay off. Overall, the average Baby Boomer can spend more (compared to their spending from last year), whereas younger generations may spend less (compared to their spending from last year).
The study cited inflation as a major contributor to the financial hardship younger generations may face, "Anytime we have inflation, we also have differences in spending. Inflation is very costly for any economy. It causes lower income growth as well as higher inequality across people. In fact, inflation is well known as something that creates inequality between people in the economy (due to prices of different goods and services changing differently)."
FIU's study offered a solution to the issue, calling for pricing stability to bring less uncertainty to the economy. With more young people entering into the workforce, the future would see increased salaries for young people, bringing back overall economic prosperity.
