A waterfront mansion on Star Island, Florida.
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Millennial millionaires are temporarily shelving major purchases as interest rates and inflation rise, according to CNBC’s Millionaire survey.
According to a survey, nearly half of millennials say rising borrowing costs are delaying car purchases, and 44% say rising interest rates are delaying home purchases. More than one-third say inflation delayed travel and vacation.
The CNBC Millionaire Survey, which surveys people with investable assets of $ 1 million or more, suggests that inflation and rising borrowing costs are climbing the ladder of wealth. Inflation has hit the middle class and low-income groups the most, but rising interest rates are beginning to weigh on wealthier and younger consumers, especially for high-value commodities.
Studies show that millennials can reduce large purchases by a factor of three compared to baby boomers.
“Millionaires of the millennial generation deal with things that they have clearly never experienced,” said George Walper, president of Spectrum Group, which is investigating at CNBC. “As a result, they are changing their behavior and spending plans.”
Respondents born after 1982 and currently under the age of 40 are considered millennials by the Spectrem Group and the survey. Respondents aged 57 to 75, born between 1948 and 1965, were considered baby boomers.
Inflation and growth have created two distinct and related spending constraints for wealthy consumers.
Inflation has pushed up the prices of luxury goods such as eating out, plane tickets, hotels and even certain monthly subscriptions. Studies show that 39% of millennials are eating out less due to rising inflation. 36% reduced vacations and 22% reduced driving.
At the same time, the Federal Reserve’s rate hikes have pushed up housing and car borrowing costs in particular.Wednesday central bank Increased the benchmark rate In the range of 1.5% to 1.75% Another hike may come in July.
Two-thirds of the millennials surveyed say they are “less likely to borrow money than they were a year ago” due to high interest rates. This equates to only 40% of the baby boomer generation.
Forty-four percent of millennial respondents said higher rates delayed them to buy new homes, compared to just 6% of baby boomers. Almost half of millennials say they are postponing car purchases because they are more than twice as likely as baby boomers.
Millennials are usually a major driver of both residential and automotive sales growth.
“Millennials, like everyone else, recognize that the mortgages they saw in January are now more than doubling,” Wolper said.
CNBC’s millionaire survey was conducted in May, before the Fed’s latest rate hike. Approximately 750 respondents reported that they were financial decision makers or shared financial decisions within their households.
Millennials appear to be more optimistic about investment than older millionaires. Fifty-five percent of millennial millionaires say inflation will last for less than a year. Forty percent of millennials surveyed plan to buy more stock as inflation accelerates, compared to just 11% of baby boomers.
Millennials are also more optimistic about the impact of inflation on equity returns. Almost 90% of millennial respondents believe that the Fed is “confident” or “somewhat confident” in its ability to manage inflation. I’m totally confident. “
More than 70% of millennials believe that the economy will be stronger or “much stronger” by the end of 2022. Millennials also said the asset markets will be at the end of the year, above 2021 levels. This shows bullish confidence that the S & P 500 has fallen 20% so far.
Fifty-eight percent of millennial millionaires say asset markets are up at least 5% and 39% expect double-digit profits. In contrast, 44% of millionaire boomers expect the market to fall by double digits.
