Millennials are defined by the Oxford Dictionary as people who have reached young adulthood in the early 21st century and, typically, they were born between 1980 and 1999 (ages 18-37). In 2015, the millennial population (born 1982-2004) in the United States reached about 75.4 million, outnumbering the 70.9 million baby boomers (born 1946-1964, ages 53-71). Looking at the racial makeups of both generations, whites account for 55.7% of millennials, lower than the 72.2% of baby boomers.

Millennials are more likely to attain higher education levels. In the US, the share of college graduates increased consistently during the post-war era, and after the financial crisis, in 2012, the population with a bachelor's or advanced degree surpassed that of high-school graduates. In 2016, the share of college graduates grew to 33.4%, outdistancing high-school graduates at 28.8% (Fig. 1). Blacks and Hispanics have also seen an increase in their populations with a bachelor’s or advanced degree, from 11.3% and 9.2% in 1990, to 22.5% and 15.2% in 2015, respectively. Expectations that higher education is linked to higher salaries served as an incentive for them to pursue a bachelor’s or advanced degree. In 2015, among the population aged 25 and above, the median income of those who have at least a bachelor’s degree was USD 58,000, more than double the USD 26,000 for high-school graduates.

Connected to this, the amount of student loan debt has swollen as the percentage of people with a bachelor’s or advanced degree has risen, and this is particularly true of millennials, who reached college age in 1998 and thereafter. The total student loans debt, which had been USD 240 billion at the end of March 2003, ballooned to a record-high USD 1.31 trillion by the end of 2016―a non-negligible level almost comparable to the amount of subprime loans that triggered the financial crisis (9% of the then-GDP).¹ Moreover, as of 2016, 35% of all student loan borrowers had at least USD 25,000 in debt.

For many millennials, despite their bachelor’s or higher degrees, the labor market is no sellers’ market, which is a major factor behind the delayed repayment of student loans. As of March 2017, the employment rate among 25- to 34-year-olds was 78.6% (the percentage of the employed in the working population aged at least 16. The working population does not include any of those who are on active duty in the military, or who are in an institution such as a nursing home or prison.) The labor force participation rate (the percentage of those actively looking for work in the working population mentioned above) was 82.4%. Both are still below their respective pre-global financial crisis levels. Meanwhile, the unemployment rate stood at 4.5%, in parallel with the national level; however, it still seems relatively high compared to the 3.5% recorded in April 2000, when the labor force participation rate was higher.

Nonetheless, millennials are more eager to spend their money on experiences than other generations. All experience-related categories such as travel, entertainment, and eating out make up 34% of millennials’ total expenditure, which is larger than the 28% share for non-millennials (Fig. 2). A higher percentage (92%) of 18- to 29-year-olds own smartphones than the average 68% of those aged 30 and above². Thanks to the popularity of social networking services (SNS), they are now geared up to “share experiences.” In 2013, Oxford Dictionaries added a word, “FoMO” (Fear of Missing Out), which refers to not wanting to be left out of the information loop. As an extreme example, some millennials, who dislike feeling left out when looking at things others have shared on social media, seek experiences only for the purpose of sharing, creating something of an upside down world. Along with newly coined words that frequently appear on social media, including “BAE (Before Anyone Else)” and “ICYMI (In Case You Missed It),” this phenomenon demonstrates millennials’ high awareness of sharing experiences, in both good and bad ways.

Sharing-minded millennials have created new industries. One of these is the sharing economy, particularly known for the vacation rental service Airbnb. Not only delivering on convenience and affordability, this company has placed a priority on the sharing of information, i.e., experiences in the form of user reviews, which has made this business a successful example. Experience-sharing tools also became big hits. GoPro, a manufacturer of digital video cameras, and Fitbit, which produces wristbands for sharing activity data, went public in June 2014 and June 2015, respectively.

While millennials apparently value experience-related consumption, it is expected that their spending patterns will become less different from that of other generations as their life stages progress. For example, a survey conducted by the Federal National Mortgage Association (Fannie Mae) found that 95% of those aged 25-34 want to buy a home. According to another forecast by the US bank J.P. Morgan & Co., millennials’ expenditures are likely to expand from USD 600 billion to USD 1.4 trillion in 2020, which will underpin consumer spending.

An interview survey of millennials living in New York revealed their wish for home ownership. The dominant opinion among those respondents, regardless of their race and ethnicity (Asian, Hispanic, etc.), is that they want to buy a home in the future for marriage and child rearing, among other reasons. Asked about spending on expensive items such as automobiles and brand products, some respondents said that they were cutting back on spending on those items as they could not afford such luxuries, while some others were considering such purchases as a reward for themselves. This could be interpreted that millennials are, in fact, trying to prioritize their spending in line with their income level.

The advent of smartphones and social media not only encouraged millennials to spend their money on experiences, but also moved them to share them. And the economic environment is also affecting their spending habits. It is projected that millennials will come to spend more on material goods as their age and income advances in the future, and the share of material goods as part of their expenditures will improve. This would mean that a generation utilizing social media and seeking goods will play a key role in consumer spending.