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    March 6, 2014

    William R. Emmons

    Center for Household Financial Stability

    Federal Reserve Bank of St. Louis

    William.R.Emmons@stls.frb.org

    These comments do not necessarily represent the views of the Federal

    Reserve Bank of St. Louis or the Federal Reserve System.

    Generations X and Y:

    Facing Economic and Financial Challengesin the Shadow of the Baby Boom

    1

    conLowdownL ittle R ock

    mailto:William.R.Emmons@stls.frb.orgmailto:William.R.Emmons@stls.frb.org
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    2

    Generations X and Y:Facing Economic and Financial Challenges

    in the Shadow of the Baby Boom

    Why generations matter for economic and financial

    outcomes

    Who are Generations X and Y?

    Opportunities for Gen X and Gen Y

    Labor markets: Youll benefit from scarce competition.

    Asset markets: We need you to buy our houses and stocks.

    Economic and financial challenges facing themembers of Gen X and Gen Y

    Damage from the Great Recession

    Can living standards keep rising?

    Fiscal and environmental sustainability

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    3

    Why Generations Matter for Economic

    and Financial Outcomes

    Think of generations as cohorts (groups) that move

    through their lives side-by-sideyour peer group.

    New generations affect overall supply and demand.

    A large supply of workers may push down wages; a large

    number of savers may push down interest rates.

    A large demand for education, employment, housing, or

    social insurance will affect political choices.

    Each generation is unique, shaped by social,cultural, and political experiences.

    Historical episodes affect attitudes and behaviors.

    Each generation will have its turn in charge of the

    economy and the political process.

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    Generations Since 1900

    The Greatest Generation, born 1900-24

    (included people who fought in WW II)

    The Silent Generation, born 1925-45(Depression and WW II)

    Baby Boomers, born 1946-64

    Generation X, born 1965-80

    Generation Y (also called Millennials

    or Echo Boomers), born 1981-2000

    The Post-Millennial Generation, born

    after 2000

    Currently

    90-114 years old

    69-89

    50-68

    34-49

    14-33

    Under 14

    Big

    winners

    Big

    losers

    ?

    ?

    ?

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    5

    Generations Since 1900:

    How Big?

    Millions of

    people

    Source: Census Bureau

    Projections

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    Millions of

    people

    Source: Census Bureau

    Projections

    Generations Since 1900:

    How Big?

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    Millions of

    people

    Source: Census Bureau

    Projections

    Generations Since 1900:

    How Big?

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    Millions of

    people

    Source: Census Bureau

    Projections

    Generations Since 1900:

    How Big?

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    9

    Millions of

    people

    Source: Census Bureau

    Projections

    Generations Since 1900:

    How Big?

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    10

    Millions of

    people

    Source: Census Bureau

    Projections

    Generations Since 1900:

    How Big?

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    Generations Since 1900: Adjusting

    for Different Generation Lengths

    Millions of

    people

    Source: Census Bureau

    Projections

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    12

    Generations Since 1900: Adjusting

    for Different Generation Lengths

    Millions of

    people

    Source: Census Bureau

    Projections

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    13

    Generations Since 1900: Adjusting

    for Different Generation Lengths

    Millions of

    people

    Source: Census Bureau

    Projections

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    Generations Since 1900: Adjusting

    for Different Generation Lengths

    Millions of

    people

    Source: Census Bureau

    Projections

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    15

    Generations Since 1900: Adjusting

    for Different Generation Lengths

    Millions of

    people

    Source: Census Bureau

    Projections

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    16

    Generations Since 1900: Adjusting

    for Different Generation Lengths

    Millions of

    people

    Source: Census Bureau

    Projections

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    17

    Generations Since 1900: Adjusting for

    Different Generation Lengths and

    Growing Overall Population

    Source: Census Bureau

    ProjectionsPercent o f

    overall

    population

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    Generations Since 1900: Adjusting for

    Different Generation Lengths and

    Growing Overall Population

    Source: Census Bureau

    ProjectionsPercent o f

    overall

    population

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    Generations Since 1900: Adjusting for

    Different Generation Lengths and

    Growing Overall Population

    Source: Census Bureau

    ProjectionsPercent o f

    overall

    population

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    20

    Generations Since 1900: Adjusting for

    Different Generation Lengths and

    Growing Overall Population

    Source: Census Bureau

    ProjectionsPercent o f

    overall

    population

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    Generations Since 1900: Adjusting for

    Different Generation Lengths and

    Growing Overall Population

    Source: Census Bureau

    ProjectionsPercent o f

    overall

    population

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    Generations Since 1900: Adjusting for

    Different Generation Lengths and

    Growing Overall Population

    Source: Census Bureau

    ProjectionsPercent o f

    overall

    population

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    Life-Cycle Stages: Which Generation

    Had the Largest School-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    population

    Age of the f irst year s members of the generat ion

    First year of

    cohort: 1900

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    24

    Life-Cycle Stages: Which Generation

    Had the Largest School-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    populationFirst year of

    cohort: 1900

    1925

    Age of the f irst year s members of the generat ion

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    25

    Life-Cycle Stages: Which Generation

    Had the Largest School-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    populationFirst year of

    cohort: 1900

    1925

    1946

    Age of the f irst year s members of the generat ion

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    26

    Life-Cycle Stages: Which Generation

    Had the Largest School-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    populationFirst year of

    cohort: 1900

    1925

    1946

    1965

    Age of the f irst year s members of the generat ion

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    Life-Cycle Stages: Which Generation

    Had the Largest School-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    populationFirst year of

    cohort: 1900

    1925

    1946

    1965

    1981

    Age of the f irst year s members of the generat ion

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    28

    Life-Cycle Stages: Which Generation

    Had the Largest School-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    populationFirst year of

    cohort: 1900

    1925

    1946

    1965

    1981

    2001

    Age of the f irst year s members of the generat ion

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    29

    Life-Cycle Stages: Which Generation Had

    the Largest Working-Age Population?

    Source: Census Bureau

    Percent o f

    overall

    population

    Age of the f irst year s members of the generat ion

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    Generations X and Y and Post-

    Millennials Will Be in Scarce Supply

    Source: Census Bureau

    Percent o f

    overall

    population

    Age of the f irst year s members of the generat ion

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    Supply and Demand in the

    Labor Market

    Price =

    wage rate

    Quantity =

    hours worked

    Supply of workers

    Demand for workers

    W

    H

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