Federal Reserve Chair Janet Yellen delivered testimony in front of the Republican-led Senate on Tuesday in which she delved into a variety of economic, monetary and domestic issues. One of the topics that she was asked her opinion on was millennials, an age demographic that is going through some hard times: low wages, low job prospects, low assets.
According to Yellen, millennials are forcing some of the best and brightest of the United States to scratch their heads because they can’t understand their behaviors, and it’s only as of late that we’re finally beginning to understand this tech-savvy generation.
Speaking before the Senate Banking Committee, Yellen reported some of the trends the central bank has noticed. Millennials are waiting to purchase houses, delaying marriage, experiencing tremendous levels of student loan debt and having a very difficult time in today’s labor market.
However, the head of the century-old institution does think the millennial generation will start buying homes and having families soon as the overall economy starts to make gains. In the meantime, though, "we’ve yet to really see how this is going to affect that generation."
As the Wall Street Journal puts it: "Are millennials the worst generation in U.S. history? The verdict is still out."
Janet Yellen on U.S. Labor Market
Yellen further delivered testimony on the overall labor market, which could either persuade the U.S. central bank to raise interest rates this summer or continue to remain patient about any rate hikes. The Fed Chair noted that the employment situation has improved in various categories, long-term unemployment has fallen and fewer workers who want to work full-time are reporting they can only find part-time jobs.
"However, the labor force participation rate is lower than most estimates of its trend, and wage growth remains sluggish, suggesting that some cyclical weakness persists," said Yellen. "In short, considerable progress has been achieved in the recovery of the labor market, though room for further improvement remains.”
Yellen also showed her dissatisfaction with Kentucky Republican Senator and possible 2016 presidential candidate Rand Paul’s reintroduction of his father’s - Ron Paul - "Audit the Fed" bill. The Fed Chair believes this politicizes the monetary policy process though many critics of the central bank say that is already the case.
In addition, proponents of the Audit of the Fed bill purport that it does no such thing. It just looks at the internal finances of the Fed rather than changes the way it has conducted itself for over the a century.
Fed Data on Millennials
Earlier this month, the Federal Reserve Bank of New York (FRBNY) released its 2014 fourth-quarter Household Debt and Credit Report, in which it warned that today’s millennials are putting their futures at risk because of the large amount of student debt they’re taking on.
The quarterly data highlights that the student loan debt level stands at $1.16 trillion, up by $31 billion from the previous quarter. Meanwhile, the delinquency rate - a loan that is past due by 90 days or more - is 11.3 percent. Both statistics are higher than all other forms of consumer debts - credit card, automobile loans and miscellaneous debt - and delinquency rates.
“Although we’ve seen an overall improvement in delinquency rates since the Great Recession, the increasing trend in student loan balances and delinquencies is concerning,” said Donghoon Lee, research officer at the Federal Reserve Bank of New York, in the report. “Student loan delinquencies and repayment problems appear to be reducing borrowers’ ability to form their own households.”
Whether or not the millennial generation will be named the worst, or lost generation can only be determined within the next couple of decades.