Biden's stagflation is another blow to millennials

You know the bad news about the economy. GDP declined by 1.4% in the first quarter of 2022. Inflation stands at the highest level in four decades, with gas prices leading the way. Stock markets are at their lowest ebb since the dark days of the pandemic.

So it's not very surprising that Americans are gloomy about their prospects. According to a Morning Consult poll released on Tuesday, just 26 percent of the public believe they are securing their financial futures. Recent consumer confidence numbers also show anxiety, if not outright panic.

Could there be a silver lining to these looming clouds? Desperate for good news, the administration and its supporters have emphasized a few positive trends. For one thing, unemployment is way down. For another, surging house prices have buoyed the finances of the people who own them.

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Some of these talking points are hot air. For all the talk of rising wages and tight labor markets, inflation is eating up nominal raises. Reduced real wages may also constrain labor market participation, which dipped slightly in April after several months of increases.

Booming Zillow estimates are exciting for homeowners. As the journalist Benjy Sarlin observed on Twitter, though, they can't realize much of their theoretical wealth until they sell — and likely apply the proceeds to a new housing purchase in the same pumped up market. Unless they own multiple residences or plan to significantly downsize or move to a much cheaper area, they're probably not as well off as they think.

Still, there's an element of truth in defenses of the Biden economy. If you own a house, have a fixed-rate mortgage, and have significant investments that you don't need to cash in immediately, you're probably doing okay. And households with higher incomes have more of a cushion against rising consumer prices. Those advantages are reflected in the Morning Consult poll, where Baby Boomers and high earners are more likely to report a good financial condition than younger and poorer respondents.

But that's just another way of restating the generational problem with American political economy. The promise of reasonable comfort has mostly been realized for those who started careers, started 401Ks, and bought real estate before the 2008 financial crisis. For many of their children and younger siblings, though, goals once regarded as inevitable results of a college education seem like unattainable luxuries.

It's easy to dismiss challenges facing the overeducated and underemployed as the whining of the already privileged. After all, the majority of younger Americans without BAs have it far worse by any conceivable measure. That's why demands for blanket cancellation of student loans are so tonedeaf. According to most economists, these proposals offer the greatest benefit to debtors with the highest potential earnings, including those who pursued graduate degrees in law, medicine, and other professions.

Even so, there's genuine reason for concern. Although scholars dispute the relation among causes, the explosion of inescapable costs for housing, health care and higher education, even before the recent general inflation, likely contribute to the collapsing birth rate. In the long term, lower birthrates mean fewer workers relative to retirees. Old people vote, so cuts to social security and other programs that help the aged are unlikely to succeed. That means younger generations will likely have to pay higher taxes, adding to their financial burdens and further suppressing family formation. Americans under 40 or so aren't wrong to think the future looks bleak.

The expectation of downward mobility has political consequences, too. In different ways, employee-driven wokeness, the revival of organized labor among educated workers, and current iteration of the New Right are movements of relatively young people who don't see a place for themselves in an economic, cultural, and sexual order established largely by their Baby Boomer parents and grandparents. Despite their ideological differences, these movements share a temperamental opposition to the status quo that's not entirely explained by youth. You can't expect deference or gratitude from people who don't expect any rewards for their loyalty.

If you're inclined to optimism, you can make an argument that the shift to work from home will reduce some of these pressures. If it's too expensive to live in San Francisco or Washington, after all, video conferences and email make it possible to live somewhere less expensive — and very likely more pleasant. Less concentration of wealth and opportunity in big cities might also reduce geographic polarization. Refugees from California or New York might turn some red states a bit more purple. But the lower cost of living, better chances for property ownership, and corresponding advantages for having and raising children might also convert them to some of the views and virtues conservatives prize.

There's reason to doubt the optimistic scenario, though. One is that housing prices are going up in historically affordable regions as well as the usual coastal cities. Another problem is that work from home works best for relatively senior employees. As Megan McCardle argues in The Washington Post, younger workers are likely to have trouble learning their jobs and establishing professional networks on Zoom. And there's a heightened risk that already remote positions could be outsourced to workers even farther away–from, say, Florida to Bangladesh. Industrial workers learned how that works out long ago.

In the last third of the 20th century, a youth revolt transformed America. In culture, politics, and economics, it's still the Boomers' world. The rest of us are just living in it. I don't know what it would take to shuffle the deck again. But the postpandemic economy brings us closer to a reckoning.