Millennials Are Rapidly Getting Richer

The wealth of young Americans has grown rapidly after years of stagnation, thanks to the strong recovery of the U.S. economy.

Data compiled by the Center for American Progress (CAP) has found that Americans aged under 40 are outpacing other age groups when it comes to accumulated wealth, employment rates and wage growth following the coronavirus pandemic. In four years, the average wealth of households under this age has grown by almost 50 percent since 2019.

Read more: Compare the Best High-Yield Savings Accounts to Grow Your Savings

Compiling data from the Federal Reserve, CAP found that the average wealth of these households reached $259,000 in the fourth quarter of 2023, reflecting a 49 percent rise—or $85,000—up from $174,000 in the same period in 2019, even with inflation taken into account. Average wealth is measured using a household’s assets, including bank accounts, stocks and real estate, minus its liabilities, such as outstanding student loans and mortgages.

This wealth accumulation is considerably more than for other age groups, with inflation-adjusted average wealth decreasing by seven percent for households aged 40 to 54. Elsewhere there was a four percent increase for those aged 55 to 69, while households aged 70 and above experienced a 15 percent growth during the same time frame.

“Such rapid inflation-adjusted wealth growth for young households has never occurred before in the wealth data, which go back to 1989,” the report explained, noting that inflation-adjusted wealth for the under-40s “moved in a band of about $90,000 to $190,000 for 30 years.”

It fell from about $180,000 to $90,000 during the recession caused by the 2008 financial crisis before slowly recovering in the 2010s to $174,000, in the final quarter of 2019. “This historically rapid wealth growth for younger households, therefore, provides an injection of financial security and upward economic mobility,” CAP said in its report, issued in late April.

While the report indicates good financial news for millennials and younger, “all of this new wealth is not necessarily permanent,” warned market analyst Kevin Huffman, owner of Kriminal Trading.

Read more: How to Build an Investment Portfolio

“Rising interest rates and a looming recession would likely result in depressed home prices and declining stock markets, taking away recent gains,” he told Newsweek. “Student loan debt, meanwhile, is still dragging down many young adults, making it difficult for them to save and invest.”

However, Huffman says the one widely used measure, the American dream—where the children of the previous generation grow up to become wealthier than their parents—is still on the fence. “It’s too early to say whether millennials will end up as wealthy as their parents or grandparents, but there are some good signs,” he said. “Younger generations are more likely to talk seriously about financial literacy and fiscally responsible budgeting. But systemic issues—such as rising housing costs and stagnant wages—are still barriers to overcome.”

Frank Cartwright, co-founder of Yield Investing, told Newsweek that despite the encouraging report, millennials are still up against “a challenging path to match the wealth levels of previous generations, who benefited from more favorable economic conditions and lower cost burdens.”

Read more: Current Money Market Account Rates

Looking beyond the here and now, Cartwright said that “future generations will encounter a different set of economic challenges and opportunities, shaped by factors like technological advancements and climate change, which will influence their prospects for wealth accumulation.”

There is, nonetheless, a “sliver of hope,” Huffman said, but he warned that only by “fixing systemic problems, increasing financial literacy and preparing for the next economic downturn can we ensure that this wealth carries with it the blessings of long-term financial security for the next generation.”