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E.J. Antoni: How Bidenomics is crushing Generation Z



Young Americans are increasingly dissatisfied with “Bidenomics,” and recent data on consumer debt helps explain why. About 1 in 7 Generation Zers have maxed out their credit amid skyrocketing prices and sagging real wages. Dreams of retirement and homeownership have become little more than just dreams for this generation. The culprit: failed public policy.

When President Biden took office, he was handed an economy growing at an annualized rate of $1.5 trillion. Inflation was a mere 1.4%. Yet instead of simply allowing the economic recovery to continue, Mr. Biden spent trillions of dollars the nation didn’t have and declared war on American energy.

Since the Treasury couldn’t borrow enough money to meet the avalanche of spending, the Federal Reserve created the money for the government to spend. That devalued the dollar by about 20%, causing prices everywhere to rise.

In addition, Mr. Biden’s so-called green energy policies drove up energy costs across the board. The price of gasoline, for example, rose by about 46%, and the price of electricity by about 29%. Since energy affects the price of everything we do and everything we buy, this added insult to injury, increasing prices beyond the effect of runaway government spending.

For young Americans, these higher prices have been devastating. Necessities like food and rent have increased in price by more than 20% while wage growth hasn’t kept up. To try to make ends meet, many have responded by picking up a second or even a third job, which is why a record number of Americans have more than one job.

Young Americans have also cut back their savings, and many aren’t saving at all. Instead, they’re doing the opposite: going into debt. Until the next paycheck comes, many Gen Zers have been relying on credit cards to get by.

As more of them max out their credit cards, however, there’s nowhere left to turn. In just four years, the American standard of living for young people went from being enjoyed to endured.

The situation is little better for millennials; 1 in 8 of that generation have maxed out their credit. Americans in both generations are abandoning hope of ever achieving long-term goals such as retirement or owning a home — anything that requires saving.

As the saying goes, there’s too much month left at the end of the money. Small wonder that few young Americans have an emergency fund. But it’s hard to blame them when prices have risen so much faster than wages.

Since Mr. Biden took office, the average American’s hourly wage has risen $4.98, but what that larger hourly wage can purchase has dropped by 67 cents. The hourly loss from inflation is a whopping $5.65, which is more than the average worker loses per hour to federal income tax.

Even if a young family today does squirrel away the money for a down payment on a house, it’s impossible for most of them to afford the monthly payment. For just a median-price home, that payment has more than doubled under Mr. Biden, to about $2,100 per month.

That means it now costs over $13,000 more per year for the same house. If young Americans have to put groceries on a credit card, chances are they don’t have thousands of dollars lying around.

Likewise, many Gen Zers and plenty of millennials have stopped saving for retirement since things like 401(k) contributions don’t make much sense when you can’t make your car payment. And it’s no coincidence that auto-loan defaults for young Americans are rising at the fastest rate since the global financial crisis of 2007-2009. They are completely tapped out.

Young adults have been hit particularly hard by Bidenomics because they’re less likely to have assets such as housing and stocks that would appreciate rapidly in this time of high inflation. Younger workers also tend to have jobs whose salaries adjust more slowly to inflation.

Financially crushed Gen Zers, hit by this one-two punch, need to understand what is to blame for their troubles: the big-government agenda defined by multitrillion-dollar federal budgets and a burdensome regulatory state.

If the leviathan isn’t turned back, younger generations will become a reflection of their government — perpetually in debt.

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E.J. Antoni is a public finance economist and the Richard F. Aster fellow at The Heritage Foundation, and a senior fellow at the Committee to Unleash Prosperity.

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Posted: June 12, 2024 Wednesday 12:25 PM