Millenials surfacing as new dominant source of wealth and spending

Understand more about this generation.

Millennials (“Generation Y”) are defined as the demographic cohort born post-1980 (currently aged 18-34Y). Globally, there are c2bn Millennials with 86% of them living in EMs.

According to a research note from Bank of America Merrill Lynch, millennials are the no. 1 workforce demographic in the US and currently account for $1.3tn in direct annual consumer spending, which will grow as their annual income reaches $8.3tn by 2025E in the US alone.

They are also set to benefit from the “Great Transfer”: the c$40tn of assets that will shift from the Boomers to Millennials over the next generation. Globally, Millennials will account for 75% of the workforce by 2025E.

Here's more from Bank of America Merrill Lynch:

Like every generation, Millennials display generalised and unique traits, clichés, and contradictions that are to understanding their role as a force for creative disruption.

Areas poised for disruption in the next 3-5Y include accommodation, autos, drinking and dining, finance, media, technology, and travel, among other areas.

We highlight eight entry points for investors wishing to play the Millennials theme: (1) Technology; (2) Consumers; (3) Drinking, Dining and Health & Wellness; (4) Households; (5) Financials; (6) Education; (7) Women; and (8) the Sharing Economy.

Who are the Millennials? We define Millennials as the demographic cohort born between 1980 and 1997, ie, those aged between 18 (born in 1997) and 35 (born in 1980). Millennials are also referred to as Generation Y or Gen Y, the ‘Echo Boomers’ and ‘Trophy Kids.'

The term Millennials is thought to have been coined in the 1990s (cf. Strauss and Howe), but its popular usage has skyrocketed only in the past two to three years.

There are an estimated 2bn Millennials globally – close to one-third of the worldwide population – with 86% of them living in EMs.

Influence to grow over time: peaking at 81mn in 2036E: The total US Millennial population size is forecast to continue to grow, reaching its peak of 81.1mn by 2036E, driven largely by immigration. This is in stark contrast to the demographic drivers underlining the Baby Boomers, which is expected to fall significantly from c.75mn today to under 17mn by 2050E. As a result, Millennials will be the #1 influencer of the US economy in the next couple of decades, in our view.

Fast pace of growth in Hispanic & Asian populations: The increase in diversity has been driven by the huge growth of the Hispanic and Asian populations in the US. By 2050E, the Hispanic population is projected to have grown by 167% whilst the number of Asians will have increased by 142%.

Currently, New Mexico and California have the highest percentages of Latinos within their youth population, at 51% and 42% respectively. This is significantly higher than the national average of just 20%.