Are Young Families Today Worse Off Than Their Parents Were?

         Are Young Families Today Worse Off Than Their Parents Were?

Yes and No according to BMO Economics

PR Newswire

CHICAGO, Oct. 26, 2012

CHICAGO, Oct. 26, 2012 /PRNewswire/ -- Who had a tougher start to their
working and family-raising years: Generation Y or their baby-boomer parents?

To find out, BMO Economics compared U.S. economic and financial indicators for
the period 2002-11 (representing the Generation Y or "echo boomer" families)
with the period of 1972-81 (representing their baby-boomer parents.) "The two
periods had their fair – or unfair – share of economic troubles," said Sal
Guatieri, Senior Economist for BMO Economics. "Notably there was a credit
crisis and Great Recession recently versus a double recession and stagflation
a generation ago."

Here are some of the findings of the report:

  oFinding work was only modestly more difficult in the past decade because
    the labor force grew faster in the 1970s and early 1980s reflecting strong
    population growth and rising women participation rates.
  oAfter adjusting for higher inflation in the 1970s, real income growth was
    similarly bad in the two periods. However, typical young households today
    carry about twice as much debt relative to income than a generation ago.
  oWhile house prices are higher than three decades ago, mortgage payments
    absorb less income now because of lower interest rates. However, owner
    occupiers have much less equity in their homes today.
  oReal disposable income of young families was a third higher in 2011 than
    in 1984, reflecting more double income households and higher earnings.
  oThanks to low inflation and lower taxes, young families have more buying
    power than their parents three decades ago.

In the past decade, young Americans have struggled more with debt and
joblessness and have less leisure time than the previous generation. However,
on average, they are wealthier, enjoy lower housing costs, earn and consume
more, and have higher living standards.

Concludes Guatieri, "It's not clear which generation had a worse start to
their working and family-raising years. The future however, may be less
ambiguous, as rising public debts and retiree obligations suggest younger
families could get stuck with a bigger share of the tab than their parents."

The full report can be downloaded at .

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American financial organization with 1,600 branches, and a retail deposit base
of approximately $180 billion

SOURCE BMO Harris Bank

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