The current health crisis is leaving a substantial mark on the economy—with ripple effects for the future. But each generation is likely to feel the impact differently, says Dr. Marci Rossell, a former chief economist for CNBC. Sharing her insights for a Haworth Connect presentation, Dr. Rossell noted that, in the short term, money and stock markets will be the pain points. In the longer term, the impact will be more personal—especially for the young.
“This will leave them with a risk aversion that will follow them for the rest of their lives. They will save more money. They’ll buy a different kind of house. They will choose a different kind of lifestyle, maybe for the next 20 years,” said Dr. Rossell.
Older Americans—retirees and those 10 to 15 years away from retirement—will more acutely feel the pain of the bear market. The crisis will be even more profound for their children and grandchildren, many of whom watched their graduations and other significant events canceled as their lives ground to a halt.
“They will be left with a bit of a residual effect, just like with the 2008 Great Recession, when young people graduated from college into the worst job market the world had ever seen up until that point,” Dr. Rossell said.
Millennials who came into adulthood during the Great Recession have always known the economy is uncertain. The global pandemic and its economic fallout will serve as confirmation that they need to save more money in anticipation of these income disruptions.
Dr. Rossell also thinks young people might even reconsider their heretofore growing attraction to denser population areas, like San Francisco, New York, Boston, and Washington, DC. “They're going to want homes that are larger, with more work-from-home space, and where they can retreat should they have to be in their homes for weeks at a time,” she said.
“This will leave young people with a risk aversion that will follow them for the rest of their lives. Even though the memory of this pandemic economy will fade from a risk perspective, you will see a residual effect for the indefinite future.”
Dr. Marci Rossell