America’s Two-Track Economy Is Leaving Gen Z Behind

Inflation has monopolized much of the conversation in the global post-pandemic recovery, but there’s another talking point: debt. And it’s been good for some and bad for many others. For the first time in nearly a generation investors are flocking back to fixed-income assets as US Treasuries revert back to their traditional role in the economy. Of course, the reset has not been without pain, a result of inflation and interest-rate hikes meant to tamp it down. But still, with the Federal Reserve and central banks in the UK and Europe finally signaling rate cuts ahead, appetite for longer dated US bonds has shot up. And bankers who underwrite debt may see payouts swell as much as 25% as deals pick up this year. For bond traders and equity underwriters, incentives may rise 20%.

Of course we all know about the louder parts of debt—from ballooning national deficits to commercial real estate. But, there’s a newer kind, or “phantom debt,” that lurks behind buzzy “buy now, pay later” platforms that exploded in popularity during the pandemic. The problem is that the companies behind these programs have resisted calls for greater disclosure. That’s masking a complete picture of the financial health of American households, which is crucial for everyone from global central banks to US regional lenders and multinational businesses. Then there’s Gen Z, which has higher debt levels and delinquency rates for a number of credit products—from credit cards to mortgages and student loans—than Millennials did at the same age a decade ago. The Gen Z frustration is real, writes Jonathan Levin for Bloomberg Opinion. “If you have a job, a house and some stocks, you’re probably doing just fine. But America’s two-track economy is leaving many behind, particularly young adults.”