David Arutyunyan, a Vice President of a major Investment company based in Moscow joins the program.
David starts the program by describing who millennials are. "Now Millennials are one of the largest generations in history; by 2030 they will dominate the workforce with a 75% majority. Most Millennials are about to move into their prime spending years, and that's why they are now about to reshape our economies and change the way we earn, spend, buy, sell, and do business."
"…Generally, Millennials are putting off significant social milestones like marriage, family, and children. Just for the sake of comparison, the age when people get married in the 2010s averages out at 30, versus the 20-24 in the 1970s. In the long run, however, millennials still have a traditional family mindset. Polls have shown that over 70% of them want to own their own home sometime in the future, and maybe the difference in average marriage ages can be linked to the difference in the economic environment. …Millennials usually start out with a huge student loan. Their average outstanding loan just after graduation has more than doubled over the last decade, from $10,000 to $20,000."
Millennials have been called the first digital generation; they grew up in a digital environment rather than acquire digital systems as an adult. David explains. ‘Millennials do everything online. If your business is not online, then you will probably lose out on possible clients in the future. Today's consumers expect commercial services to be provided when, where and how they want them. They have moved to companies like Airbnb and Uber to make their lives more convenient. The strongest business results are where there are on-demand offerings….Everything is NOW, I want it to be cheap, to have a lot of choices so that I can choose the best thing for me, I don't want to spend my time in offline shopping, I want to buy everything through my smartphone, which has become the most valuable gadget in my pocket."
Does this mean that the quality of goods has to increase" Host John Harrison asks. "It is more about access to goods rather than the quality of goods," David says. "Of course Generation X and baby boomers also had a lot of requirements as regards the quality of goods, but millennials have additional requirements as regards convenience of accessing the goods."
Millennials were young adults when the financial crisis burst upon the world, and this has affected the way they view money. "When the financial crisis happened over 10 years ago, millennials were not affected as much as baby boomers or Generation X. They did not lose the bulk of their real estate, or stock market value of their assets, because they were only teenagers at the time. However, the 2008 crisis had a massive influence on millennials. After the crisis, they were faced with high unemployment, stagnant wages, and that constricted their ability to support a reasonable lifestyle and save for the future. For example, Americans between 18 and 34 are earning less today, even after adjusting for inflation than their age group did in the past. Of course, this has changed their attitude towards financial institutions. For example, towards savings and pension systems. The majority of millennials tend to invest money into quality experiences, rather than make long forward-looking investments. This could undermine the stability of the existing financial system."
To the question, could millennials' attitude to ownership force capitalism to change, David says: "Access, not ownership could be used as a slogan to describe millennials. Only 35% of Americans under the age of 35 own their homes, this is particularly noticeable in large cities like New York, San Francisco, and Moscow. That is about 20% less than the previous generation, which is a huge difference. There are economic reasons why millennials have chosen access over ownership. Many millennials, despite having a good income, cannot save enough money to buy a house due to students' loans. They end up owing something like $25,000 after graduating, and so it is difficult for them to start saving up to buy a property. However, this is not just about homes, millennials have been reluctant to buy such items as cars, luxury goods, and they just want to have access to products without the negative consequences of ownership. This is called a sharing economy. So, if you want to have a home in a particular location because of your job, friends and so on, you can do that by renting. Millennials are more flexible in terms of changing location, changing jobs and cities; they do not want to be tied up to bricks and mortar in one place….This is good for labor movement but not good from the point of view of savings because the economy is driven by savings. If you do not invest in a house the construction business will go down, and there will be a lot of consequences because of that. If you rent you invest less, and this is a problem for economies."
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