Millennials Will Feel the Most Pain Because of the Fed
A realtor attends an open house at a home in San Francisco, California, US, on Saturday, Nov. 4, 2023. Mortgage rates in the US fell for the first time in eight weeks. But rates are still close to a two-decade high and borrowing costs are up steeply since early September. That’s one of many worries for Millennials.
Photographer: Michaela Vatcheva/BloombergWhen we think about interest rates going up as a way of slowing the economy, the only way they bite is by hurting debtors more than they help lenders and savers. We are right at that tipping point now, with the economy beginning to slow. And all evidence suggests the Millennial cohort is bearing a disproportionate share of adjustment.
Last week was a pretty big move toward a new regime that favors bond investors. We’re not quite there yet, since we still have to get all the way through this hiking and easing cycle by the Federal Reserve. But once the dust settles, it seems likely that the unusually low rates that we saw for so long will look like an anomaly. And that’s going to deliver a significant setback to the generation now just hitting its adult stride.