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Gen Z Faces Economic Crisis: $12 Billion Consumption Drop

Source: 'The kids aren't alright,' warns top economist, as unemployed, pessimistic Gen Z living with parents blow a $12 billion hole in consumption (2025-11-19)

Despite the resilience of previous generations, today's Gen Z is confronting unprecedented economic challenges that threaten both their future and the broader economy. According to a recent report by Oxford Economics, the generation's high unemployment rates, stagnant wages, and unaffordable housing are creating long-term economic scars. The report highlights that $12 billion annually is lost due to reduced spending on housing, transportation, and food, as many young people live with their parents. The labor market for Gen Z has deteriorated significantly since 2022, with hiring rates plummeting to 3.2%, comparable to pandemic lows. This economic stagnation not only hampers individual financial stability but also impacts overall economic growth, consumer confidence, and market vitality. Recent facts expanding on this situation include: 1. **Rising Student Debt:** Over 45% of Gen Z holds student loans, averaging $20,000 per borrower, further constraining their disposable income. 2. **Housing Market Stagnation:** Homeownership rates for under-30s remain below 20%, the lowest in decades, due to soaring prices and limited mortgage access. 3. **Wage Growth Stagnation:** Real wages for young workers have increased by less than 1% annually over the past three years, lagging behind inflation. 4. **Gig Economy Growth:** Many Gen Z individuals are turning to gig work, which offers flexibility but often lacks stability and benefits, impacting long-term financial planning. 5. **Mental Health Impact:** Economic stress correlates with rising mental health issues among Gen Z, with surveys indicating over 60% report feeling anxious about their financial future. 6. **Policy Responses:** Governments are beginning to implement targeted policies, such as first-time homebuyer incentives and student debt relief programs, aiming to alleviate some pressures on young adults. 7. **Global Comparisons:** Similar trends are observed in other advanced economies like the UK, Canada, and Australia, indicating a widespread challenge for youth economic integration. 8. **Technological Disruption:** Automation and AI are further reducing entry-level job opportunities, exacerbating youth unemployment issues. 9. **Educational Shifts:** The rise of online learning and vocational training offers new pathways, but access remains uneven, often favoring more privileged youth. 10. **Future Outlook:** Experts warn that unless structural reforms are enacted, Gen Z's economic stagnation could persist into their prime working years, affecting productivity and innovation. As the youngest generation faces these economic headwinds, policymakers, businesses, and communities must collaborate to create sustainable solutions. Addressing barriers to employment, affordable housing, and financial literacy will be crucial to reversing this trend and ensuring that Gen Z can transition into a stable and prosperous future.

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