A new study has revealed that Gen Z has been hit hardest by the recent waves of high inflation which began during the COVID-19 pandemic and remains ongoing.
Analysts have also concluded that Gen Z members who have been hit by high inflation may continue to struggle in the near future because of inflation’s ongoing effect on them.
Gen Z Struggles With High Inflation the Most
According to two new studies, Gen Z has been hit much harder by high inflation than all other generations and age groups. These studies were conducted by TransUnion, the credit reporting agency, as well as Moody’s Analytics.
Both studies further suggested that Gen Z’s struggle with inflation will remain an ongoing factor that hinders the generation’s financial success in the future — even if inflation continues to lower over time.
Younger Americans Are Trying To Land Good Jobs
These reports have taken a look at how high inflation has harmed Gen Z members right after they graduate from college and struggle to land good jobs that pay well.
Many younger adults have struggled to do this, especially as some industries have experienced a recent cooldown in hiring. As a result, Gen Z has found that they don’t have enough money to pay for skyrocketing prices.
High Prices in the United States
Gen Z — as well as all other generations in the country — have seen prices rise greatly in just the last few years.
Everything from rent to grocery store items has seemingly surged in price. For young Americans trying to get ahead in the world alone for the first time, this has been detrimental.
Why Gen Z Has Been Hit So Hard by Inflation
According to these reports, Gen Z has been hit the hardest by inflation because they are starting out with lower wages, as many of them are in entry-level jobs. They are just entering the workforce.
Because they’re just starting out, many members of this generation also don’t have a ton of money saved up.
How Gen Z Spends Their Money
However, these studies have also revealed that how Gen Z members spend their money has impacted how they’re the most affected by high inflation.
Gen Z buys a disproportionate share of the goods, products, and services that have soared the most in price because of high inflation. For example, Gen Z eats out more than other generations. This has resulted in younger Americans spending about 5.5% of their income on eating out, versus the average 4.5% other generations spend.
Gen Z Rents
Another factor has to do with rent. Though Millennials also rent at higher rates, Gen Z rents much more than the other generations. Thanks to high inflation, rent has skyrocketed in just the last few years.
This has led to Gen Z spending almost 20% of their income on rent. By comparison, the average American spends only 7% of their income on rent.
The Rise of Auto Insurance Prices
High inflation has also seen auto insurance prices soar, which has affected all generations in the country. However, this has increasingly impacted Gen Z more than others.
According to these two reports, this is because insurance companies often force younger people to pay higher premiums. These companies believe that younger Americans are more likely to get into accidents, which results in these higher prices. As auto insurance has risen by about 23% in just the past year, Gen Z has become burdened with paying more than others.
Younger Generations and Credit Card Debt
As many younger generations have struggled to deal with high prices as a result of high inflation, they’ve chosen to turn to credit cards. This has led to an increase in credit card debt among Gen Z.
About 1.6% of Gen Z credit card holders were either 60 or more days delinquent on their payments in 2023. A decade ago, only 1% of Millennials were.
Some Positives Are on the Horizon for Gen Z
While Gen Z has been hit the hardest by inflation, financial experts have claimed that there are some positives to be found.
For example, Gen Z has experienced higher inflation-adjusted wages than any other previous generation has. This could help the generation’s members adjust more to high prices in the future.
How Gen Z Works
How Gen Z works may also help the generation deal with high prices. Though many of this generation’s members have been criticized in the workplace by their elders, their ability to change jobs often may help them take advantage of higher income and bigger raises.
Gen Z switches jobs much more often than any other generation. This ability to adapt to the job market may help them in the long run.
Inflation Is Slowing Down
Even more positive is the fact that many analysts believe inflation should continue to cool down in the next few months. This should begin to help prices drop in price in the near future.
Stats have already shown that rent for new leases has dropped. Meanwhile, auto insurance costs are also forecasted to ease in overall price this year.
