Key Takeaways
- A growing share of young adults are staying in their parents’ homes, which could be due to financial reasons.
- As more young adults live at home, this trend could weigh on consumer spending as those who live at home may spend less compared to those who don’t.
In the past, life for a young adult might have followed a familiar trajectory to that of one’s parents: go to college (or don’t), move out, get a job, marry, and purchase a home.
However, some young Americans haven’t moved out of mom and dad’s house just yet.
In 2005, 11% of 25 to 34 year olds reported living with parents, but by 2023, 16% were, according to Census research.
So what’s keeping more young adults at home?
Researchers speculate that this cohort could be opting to live at home for financial reasons.
Why This Matters
Young adults who don’t strike out on their own simply don’t spend as much as their counterparts who do fly the nest. Research indicates that has a real impact on the larger economy.
The cost of both renting and homeownership have increased dramatically over the past few years, and younger generations are more likely to have student loan debt than older ones.
This issue could worsen in the near future, too, as some recent college graduates have struggled to find jobs. For college graduates aged 22 to 27, the unemployment rate is 4.8% compared to 4% for all workers, according to data from the Federal Reserve Bank of New York.
And more young people living at home could have negative downstream effects for the economy more broadly.
When young adults live at home, they may spend less compared with to their peers who moved out. Since consumer spending is a large share of GDP, an increasing proportion of young adults living at home could be a drag on GDP growth.
“The rising share of young adults living at home may, therefore, have depressed overall consumer spending by $12 to $13 billion, or about 0.1% of total consumption,” states a report from Oxford Economics. “A worse perception of labor market conditions, which for young adults are the key determinants of financial well-being, is making them more pessimistic and may make them more cautious when it comes to spending.”
