Are Young Families Today Worse Off Than Their Parents Were?

CHICAGO, Oct. 26, 2012 /PRNewswire/ -- Who had a tougher start to their working and family-raising years: Generation Y or their baby-boomer parents? 

To find out, BMO Economics compared U.S. economic and financial indicators for the period 2002-11 (representing the Generation Y or "echo boomer" families) with the period of 1972-81 (representing their baby-boomer parents.)  "The two periods had their fair – or unfair – share of economic troubles," said Sal Guatieri, Senior Economist for BMO Economics.  "Notably there was a credit crisis and Great Recession recently versus a double recession and stagflation a generation ago."

Here are some of the findings of the report:

• Finding work was only modestly more difficult in the past decade because the labor force grew faster in the 1970s and early 1980s reflecting strong population growth and rising women participation rates.
• After adjusting for higher inflation in the 1970s, real income growth was similarly bad in the two periods.  However, typical young households today carry about twice as much debt relative to income than a generation ago.
• While house prices are higher than three decades ago, mortgage payments absorb less income now because of lower interest rates.  However, owner occupiers have much less equity in their homes today.
• Real disposable income of young families was a third higher in 2011 than in 1984, reflecting more double income households and higher earnings.
• Thanks to low inflation and lower taxes, young families have more buying power than their parents three decades ago.

In the past decade, young Americans have struggled more with debt and joblessness and have less leisure time than the previous generation.  However, on average, they are wealthier, enjoy lower housing costs, earn and consume more, and have higher living standards. 

Concludes Guatieri, "It's not clear which generation had a worse start to their working and family-raising years.  The future however, may be less ambiguous, as rising public debts and retiree obligations suggest younger families could get stuck with a bigger share of the tab than their parents."

The full report can be downloaded at www.bmocm.com/economics .

About BMO Harris Bank

Based in Chicago, BMO Harris Bank N.A. provides a broad range of personal banking products and solutions through over 600 branches and approximately 1,300 ATMs in Illinois, Wisconsin, Indiana, Kansas, Missouri, Minnesota, Nevada, Arizona and Florida. BMO Harris Bank's commercial banking team provides a combination of sector expertise, local knowledge and mid-market focus throughout the U.S. Deposit and loan products and services provided by BMO Harris Bank N.A. Member FDIC. BMO Harris Bank^SM is a trade name used by BMO Harris Bank N.A. BMO Harris Bank is part of BMO Financial Group, a North American financial organization with 1,600 branches, and a retail deposit base of approximately $180 billion

SOURCE BMO Harris Bank

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