Has the Trump economic boom spurred a newfound optimism in debt-ridden millennials? A recent survey from TD Ameritrade of more than 1,500 Americans aged between 21 to 37 reports that 53 percent hope to be millionaires at some point. About 7 percent predict it will happen by the time they turned 30, 19 percent by age 40, 16 percent by age 50 and 7 percent by age 60 or later.
After eight years of misery under the Obama administration, things are finally starting to look up for the millennial generation. Since Trump took office, nearly 3 million jobs have been created and wage growth hasn’t been this high since the Bush administration. Meanwhile, unemployment is at a historic low.
According to Gallup, 67 percent of Americans believe now is a good time to find a quality job. Since Gallup started asking this question 17 years ago, this is the first time more than half of Americans have said so. On top of that, historic tax cuts are making millennials feel a little bit richer every paycheck.
Small business optimism has gone through the roof according to the National Federation of Independent Business, encouraging many entrepreneurial millennials to try their hand on Main Street and increasing the salaries of those who are working for small businesses. To compete in the job market, 35 percent of owners reported increases in compensation to attract new hires.
Yet the question remains: Could all of this optimism be predicated on false hope?
We shouldn’t forget that only 20 percent of millennials own a home, and with property values and interest rates continuing to rise, young people might be missing the boat on a key investment as they grow their portfolio. Self-made millionaire and bestselling author David Bach told CNBC that buying a home is “an escalator to wealth” and that “the average homeowner to this day is 38 times wealthier than a renter.”
Undoubtedly, student loans continue to have a strong yoke on millennials. The average millennial is saddled with more than $40,000 in college debt by some estimates, and around 83 percent of those who don’t own a home blame their student loans. Federal Reserve data reports that for every 10 percent increase in student loan debt, the odds of successful home ownership in the first five years after college drops by 1 to 2 percentage points. Banks, which look at debt-to-income, or DTI, ratios when they give out loans, are less likely to extend credit. About 52 percent of those who delay the purchase of a home can’t qualify for a mortgage due to a high DTI ratio.
Some millennials are stashing away for retirement, but 66 percent of those between the ages of 21 and 32 have a goose egg instead of a nest egg. Most of those who are saving for retirement have less than $20,000 in their account.
Still, their financial optimism is a positive sign that the economy is finally working for them. If the economy continues to grow, millennials will no longer be a product of the Great Recession — they will be the beneficiaries of Trump’s economic revolution.
