There’s an article in the New York Times today lamenting the number of young people who move in with their parents and deprive the economy of around $145,000, which is the economic value Moody’s puts on every new household formation.
NTT’s Catherine Rampell describes one recent grad who “saved a lot of money… but she deprived the economy of a lot of potential activity too.”
This is a line that gets tossed around a lot. Either “boomerang” children are hurting the economy or at least they are hurting themselves. The 14.2 per cent of Americans aged 25 to 34 who live with their parents are told they should be ashamed.
But wait a second. Since when is saving $145,000 a bad thing?
Remember, the average college graduate walks away with $25,250 in student loan debt. He enters a the bleakest job market in history, where only three in four adults aged 25-34 have a job. Meanwhile one fourth of young people are “idle youth” — out of school yet unable to enter the workforce. He can even be confident that his social security benefits will be stripped.
The moment things changed was the end of the housing bubble. Before 2007, buying a home really was a good idea for everyone. If you were a college grad who moved in with mum and dad, then you were foolishly missing out on the one investment that everyone knew would always gain value.
Now? Buying a home as an investment feels a lot more like speculation — and people have been getting cut trying to catch the knife for the past two years.
Screw the economy, it seems like the average grad would be smart to pocket the money. And worry about getting a job.
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.