Millennial consumers have been placed into the spotlight in a new theory as analysts continue to study the ins and outs of a slowing global economy that puts markets around the world at stake of a financial crisis.
According to CNBC, analyst Tavis McCourt at finance and wealth management firm Raymond James said in a recent note that the millennial generation shows significantly higher savings rates that affect the global economy.
In his note, McCourt explained that a higher savings rate among millennial consumers has led to "excess supply seemingly everywhere in the economy" and this is bad news for the global manufacturing sector.
Data from the financial firm revealed that compared to the spending behavior of previous generations, millennial buyers are saving much more since they are experiencing the financial crises that many regions around the world go through.
While saving is a good thing, economic analysts argued that cutting back on spending will cause a serious economic imbalance. As of August, the personal savings rate in the United States hit 8.1 percent, as opposed to 5.7 percent in 1996.
It's not just the U.S. experiencing a high savings rate. McCourt said even in China, the world's second-largest economy after the U.S., the personal savings rate is increasing at a fast rate.
The Raymond James note came amid increasing talk and fears over a potential global recession spearheaded by the United States. However, U.S. President Donald Trump has been insisting that a recession is far from reality at this point.
Talks of a recession have been rife over the past few weeks as key indicators are said to be flashing bright red not just in the U.S. but also in the European Union (EU). Business Insider reported. The U.S. Bureau of Labor Statistics revealed in a report last week that the country's unemployment rate slumped to 3.5 percent.
In September, around 11,000 jobs were cut from the U.S. workforce, further igniting fears about how the country is handling the recession risks. The manufacturing sector's index also dropped to 52.6 in September - a shocking drop from 55.3 percent in August.
As for the EU, the services index seemed to echo similar risks with the U.S. as the metric declined to 51.6 from 53.5 percent in August. It is the weakest growth rate yet since January.
Despite debates about how the millennial consumer group is affecting the global economy, some analysts believe companies can still leverage on a particular consumer behavior attributed to the millennial generation: online shopping.
Due to the influence of millennials to other consumer groups, online shopping has been gaining momentum in various industries over the past few years. Analysts believe companies should take note of online shopping as a key driver in attracting not just millennial shoppers but other consumer groups.