With investible assets of more than $1 million, American millennials are considered wealthy.
It is often thought that the poor suffer most from inflation because they are so price-sensitive.But those with more than $1 million in assets are also postponing their plans to buy homes and cars because of inflation.
As interest rates and inflation rise, millennial millionaires are putting big purchases like homes and cars on hold, according to media surveys.
Nearly half of millennial millionaires said higher borrowing costs caused them to delay buying a car, 44 percent said higher interest rates caused them to delay buying a home, and more than a third said inflation caused them to delay a trip or vacation, according to the survey.
The findings suggest that inflation and rising borrowing costs are passing pressure on hnWIs.While inflation is hitting the middle class and lower-income groups hardest, rising interest rates are starting to squeeze more affluent, younger consumers, especially on purchases such as homes and cars.
Millennials are three times more likely than baby boomers to cut back on major purchases, according to the survey.
In the United States, those born between 1981 and 1996 are classified as millennials, while those born between 1946 and 1964 are baby boomers.
George Walper, president of Spectrem Group, a research firm：
Wealthy millennials are clearly dealing with something they’ve never experienced before, and as a result, they’re changing their behavior and spending plans.
Inflation and rising interest rates impose two separate but related spending constraints on wealthy U.S. consumers.
On the one hand, inflation has pushed up the price of non-essential purchases, such as dining out, air tickets, hotels, and even the monthly subscription prices of certain software and members.According to the survey, 39 percent of millennial millionaires are eating out less because of rising inflation, while 36 percent are taking fewer vacations and 22 percent are driving less.
At the same time, the Fed’s rate increases have pushed up borrowing costs, especially for homes and cars.
Two-thirds of millennial millionaires surveyed said they were “less likely to borrow and spend than they were a year ago” because of higher interest rates.That compares with 40 percent of baby boomers.
Forty-four percent of millennial respondents said higher interest rates have caused them to delay buying a new home, compared with just 6 percent of baby boomers.Nearly half of millennial millionaires said they delayed buying a car because of higher interest rates — more than double the proportion of baby boomers.
Millennials are typically a key driver of growth in household and car sales.
The survey was conducted in May among about 750 respondents who identified themselves as financial decision-makers or co-participants in household financial decisions.
Millennials, however, seem more optimistic about their investments than older millionaires: 55% of millennial millionaires say inflation will last less than a year, while nearly two-thirds of baby boomers say inflation will last at least a year or two.As inflation accelerates, 40 percent of millennials surveyed plan to buy more stocks, compared with just 11 percent of baby boomers.
Millennials are also more optimistic about the impact of inflation on their stock returns: nearly 90 per cent of millennial respondents have “some confidence” or “some confidence” in the Fed’s ability to manage inflation — in sharp contrast to 38 per cent of baby boomers who have “no confidence”.
More than 70 percent of millennial millionaires think the economy will be stronger by the end of 2022, while two-thirds of baby boomers think it will be weaker.Millennials also say asset markets will end the year higher than they were in 2021 — a sign of optimism that the S&P 500 is down 20 per cent so far this year.