Nearly half of the nation’s young adults are now living at their parents’ homes, giving them more disposable income to spend on luxury items, according to a Morgan Stanley analyst.
Currently, 48% of young adults 18-29 are living with their parents – and that’s helping fuel an uptick in purchases of luxury items, a report by a team of analysts led by Morgan Stanley’s Edouard Aubin finds. As Fox Business explains:
“The data came from a Pew Research Center analysis, USA Today, the University of Minnesota, and a team of Morgan Stanley analysts led by Edouard Aubin.
“One sector that has benefited from the Millennial and the Gen Z decision to stay at home is luxury retailers, the report found.”
The reason, Aubin explains in an article by Financial Times, is that, without having to pay for necessities, there’s more discretionary income to spend on the finer things in life:
“We believe that the trend benefits discretionary spending. When young adults free up their budget for daily necessities (e.g. rent and grocery), they simply have more disposable income to be allocated to discretionary spending.”
While other factors, such as social media, may be contributing to the increase in luxury purchases by young adults, “we see it as fundamentally positive for the industry,” Aubin says.
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