Will millennial Americans ever be as wealthy as Gen X?

A lasting birthday present.
A lasting birthday present.
Image: Reuters/Gary Cameron
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Millennials suffered the biggest financial blow from the Great Recession in 2009, and some have worried this group could be a lost generation when it comes to building household wealth. Although disparities and inequality still persist, there are at least some signs that generation of Americans may have been catching up to Gen X in recent years.

Millennials (born 1981 to 1996) trailed Gen Xers (born 1965 to 1980) at the beginning of their adult lives, according to research by the Federal Reserve Bank of St. Louis. While the downturn a decade ago caused deep setbacks to family wealth—raising questions about whether households would be able to rebuild savings to afford homes, pay for college tuition, and retire—the millennial generation’s average family wealth has caught up over the past five years, and was fairly similar to that of Gen X (at similar ages, on inflation-adjusted terms) as of the second quarter of 2020, Fed data show. Both generations still lag behind baby boomers (typically considered people born 1946 to 1964) in their early 30s.


Millennial ownership of stocks could be one of the things helping narrow the wealth gap, and there are signs that generational income has been somewhat equal, Fed analysts say. But even though recent research is encouraging, millennials could still be trailing other generations. The latest data are based on averages, which could be distorted by a subset of wealthy families, said Ana Kent, a policy analyst at the St. Louis Fed. The bank’s researchers are still digging into median data, which could help reveal whether millennials have really caught up with Gen Xers. “It’s really too early to tell,” she said in a phone interview.

The St. Louis Fed’s work adds to research showing that deep economic downturns can have long-lasting, inordinate effects on younger generations and economic inequality. If younger people come of age when homes or stocks are comparatively expensive relative to older generations, that can make it more difficult for them to accumulate wealth. And while it may be easier these days to get loans and other financial products, that can be offset by increasing costs, like the price of an education, and heavier debt loads. (St. Louis Fed research shows that millennials without a four-year degree have lagged the furthest behind older generations.)

In the meantime, other measures of wealth signal that the generational gap is widening. The under-40 age group is about as wealthy as it was in the late 1980s, according to the St. Louis Fed’s household wealth index. But older generations appear significantly better off than they were some 30 years ago. There could also be a racial component to these findings. Older generations of Americans were more white, a group that tends to be wealthier, while younger generations are becoming more diverse, made up demographics that have lower levels of wealth, Kent said.

“The timing of when you were born really has more influence today on what your expected wealth outcome will be,” said St. Louis Fed analyst Lowell Ricketts.

It’s not all bad news. Fed researchers point out that millennials are a highly educated generation, which should help them to do well in the labor market. Even so, there are still many questions, including how younger generations will cope with the Covid-19 disruption. One thing is clear—it pays to be born lucky.