Friday, December 16, 2022

GEN XYZ CONSUMERS
Nearly half of young adults in the US & UK are living at home with their parents, and all that saved rent is fueling a luxury boom

Nidhi Pandurangi
Wed, December 14, 2022 

Shoppers in Times Square.Alexi Rosenfeld/Getty Images

Nearly half of US young adults are living at home — a high not seen since the Great Depression.

They are helping fuel a luxury boom, Morgan Stanley analysts said.

Living at home is freeing up their budgets and leaving them with more disposable income for spending.


A record number of young adults in the US are currently living at home, and all that saved rent is sparking a luxury boom.

Recent data from the US Census Bureau shows that nearly half of young Americans between the ages of 18 and 29 are living with their parents today. That's a historical high not seen since the Great Depression era, Morgan Stanley analysts wrote in a Friday note.

The analysts estimated that around 48% of young adults are living with parents in 2022, similar to levels seen in the 1940s.

The levels of young adults living at home peaked at 49.5% around 2020, coinciding with the outbreak of the COVID-19 pandemic. The data came from a Pew Research Center analysis, USA Today, the University of Minnesota, and Morgan Stanley research.

That's great news for luxury retailers, because saving on daily necessities like rent and groceries is freeing up disposable income for discretionary spending, a team of Morgan Stanley analysts led by Edouard Aubin found.

"This is of course not the only reason luxury-goods consumers are getting younger in the West (social media playing also an important part) but we see it as fundamentally positive for the industry," the analysts wrote in the note.

Factors like high rental costs, enrollment in higher-education programs, and delayed marriage are also keeping young adults at home, the analysts wrote.

"When asked about the incentives to move in with parents, 51% of the young adults said that it was to save money and 39% of them said that it was because they could not afford rent," according to a December 5 survey from PropertyManagement.com. The survey platform Pollfish conducted the survey of about 1,200 US participants online on December 1.

Similar themes are emerging among British youth

Similar themes are emerging across the pond in the United Kingdom, where about 42% of young adults lived with their parents in 2021. That's the highest level on record based on data compiled from 1996 onward by the Office for National Statistics and Morgan Stanley research.

In the first half of 2022, imports of luxury Swiss watches into the UK rose 31% year over year, the Guardian reported in June, citing data from Federation of the Swiss Watch Industry. The watches on average cost about £6,000, or about $7,400 at current exchange rates. Sales of midrange watches — those costing below £2,500, or about $3,100 — were falling at the time, the Guardian reported.

The British luxury brand Burberry reported an 11% year-over-year increase in sales in the quarter ending in September. The luxury-goods maker LVMH, which owns brands including Dior, Tiffany, Moët Hennessy, and Louis Vuitton, reported a 19% year-over-year increase in revenue for the third quarter of 2022, thanks to robust demand from Europe, the United States, and Japan.

An Insider Intelligence report on September 14 found that the luxury-goods sectors in the US and China has bounced back during the ongoing COVID-19 pandemic, but economic headwinds — like an impending recession — will weigh heavy on middle-class
 spenders.

Young Adults Living With Their Parents Are Driving a Luxury Boom: Report

Dana Givens
Robb Report
Tue, December 13, 2022 


More young people in the US are now staying at home to save some cash—but that doesn’t mean they aren’t scoping out the luxury shops.

In recent years, millennials and Gen Z have chosen to live with their parents instead of leaving the nest, thanks to the groups’ pursuit of higher education and delay of marriage, plus soaring rental costs. Now the two generations are opting to use their new disposable income to purchase high-end items, according to a new report from Morgan Stanley.

And their shopping habits are definitely having an impact: The trend has helped drive sales and increase the appeal of goods such as purses, watches and jewelry across the luxury industry, according to Bloomberg.

“When young adults free up their budget for daily necessities, they simply have more disposable income to be allocated to discretionary spending,” Edouard Aubin, an equity analyst at Morgan Stanley, said in the report. “We see it as fundamentally positive for the [luxury] industry.”

According to recent US Census data, nearly half of young Americans between the ages of 18 to 29 are living with their ‘rents, the highest percentage reached nationwide since 1940—when the country was rebuilding after the decade-long Great Depression.

One of the main reasons millennials and Gen Z are opting to stay put? The two age groups are largely delaying taking the next step in their relationship and having kids to achieve financial security before taking the plunge. 37 percent of young people were holding off on getting married or getting engaged because they want to ensure their debts were paid off first, according to a 2020 New York Post poll. Another 29 percent say they delayed purchasing their first home for the same reason.

Young adults across the pond aren’t strangers to this trend. Morgan Stanley found the number of UK residents aged 15 to 34 residing at home has increased to 42 percent, up from about 35 percent in 1999, despite the country dealing with an economic recession. More young high-income UK shoppers are also fueling luxe goods sales to increase their engagement on social media.

And now is the time to splurge. Since the summer, American shoppers have been hopping on flights to Europe to take advantage of the sinking pound and euro, getting more for their dollar across the region—and making pit stops at their their favorite retailers to score a deal. The young adults are then reselling the same investment pieces for a profit to combat rising inflation. They can use the kickback to continue the cycle and purchase even more designer goods—perhaps as a gift for their parents this holiday season.



Big Kids Living at Home are Spending a Fortune on Luxury Brands

By The Daily Upside – Dec 12, 2022
The Motley Fool 

It's one thing when your 27-year-old is living in their childhood bedroom, but it's quite another when they're doing so wearing a Rolex and Golden Goose flats.

Historic numbers of young adults still living at home with their parents are fueling a luxury boom in the US and UK.

'Rents Pay the Rent

In a development not seen since 1940, today, nearly half of all US and UK adults ages 18-29 are living with their parents, according to census data. Some never left while others are what's known as "boomerang children." Most stick with their folks because they want to save money to pursue higher education or wait until the rental and housing market isn't so cruel. Also, fewer young couples are keen on settling down as marriage and cohabitation rates have dropped from 71% in 1990 to 62% now.

Since more and more working people are relying on mom and dad for daily costs like utilities and groceries, this frees up disposable income for watches, handbags, and jewelry. While 'rents looking forward to retirement might want their progeny out of the house, Louis Vuitton and Tiffany couldn't be happier:Like a cartoon hustler who just rolled up their sleeves to reveal multiple wristwatches, the US' "big kids" have become obsessed with expensive timepieces. Companies like Watches of Switzerland saw US revenue skyrocket to $512 million in its most recent fiscal year, a 44% annual increase.
US tourists in Europe are also taking advantage of the strong dollar against the British pound and Euro. Luxury boutiques like Gucci have normally relied on Chinese spending during the holiday season, but during Black Friday, American tourist spending rose more than 40% compared to the same time in 2019. The average transaction amount was $1,313.

Not So Dependent Now: If Gen X is the competent older sibling with a cool record collection and Gen Z somehow got famous for dancing on TikTok, Millennials are the lazy, awkward middle children still sleeping on mom's couch. Or at least that's what stereotypes would have you believe. Once they do leave the nest, their champagne taste extends to real estate as well. In 2020, millennials accounted for the largest share of all home buyers in the US at 37%. And not only that, but they were also jumping into the luxury real estate market, purchasing homes worth close to $1 million on average.

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