HomeEconomyBe informed: Your kids may end up poorer than you or your dad

Be informed: Your kids may end up poorer than you or your dad

|By Arabian Post Staff| The generations of Millennials, meaning people between the ages of 19 and 35, as well as Centennials, denoting young people aged up to 18, will most probably end up poorer than their parents and grand parents, a Bank of America-Merrill Lynch report titled Thematic Investing: The New Kids on the Block has predicted.

Gen Y (“Millennials”, 19-35Y) and Gen Z (“Centennials”, 0-18Y) are the world’s most important demographics, collectively accounting for 59% of the global population. There are 2 billion Millennials worldwide and they have overtaken Boomers to become the largest living generation in US history.

The report says the financial industry  has to prepare itself for the rise of the 2.4 billion Centennials – born at the turn of the century and set to live to over 100 years. They are embracing diversity, sustainability, globalisation, disruptive technology, “peak stuff”, new business models, and entrepreneurialism like no generation before them – and they are economically optimistic to boot. Together Gen Y and Gen Z will account for c60% of the global workforce by 2020E.

The report points out that technology is the defining characteristic of Gen Y and Z’s daily lives, with 90% smartphone and social network penetration. Young cohorts check their phones 150x per day, 50 billion IMs and 6 billion emojis are sent every day, and human attention spans are falling below those of goldfish. Gen Y and Z are mainstreaming disruptive technologies and both corporates and investors need to step up to the challenge, including via smartphones and apps, social media, instantaneous communication, “snackable content”, omnichannel strategies, and making things shareable.

For the first time in history, people aged 65Y+ will outnumber children below 5 years of age before 2020E. Total fertility rates have dropped to near or below replacement rates in all regions except Africa. The downside risk is that both generations may end up poorer than their parents and grandparents, with the demographics having profound long-term effects on the viability of economic growth, housing, pensions, health and long-term care, labour markets, education and public finances.

The report estimates that the total income of Millennials and Centennials at US$21 trillion in 2015 – 35% of global gross income. The US, China, India, Japan, and Germany are the largest markets. It further orecasts that this number could grow to US$62 trillion  by 2030E, US$32 trillion  for Millennials and US$30 trillion for Gen Z.

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