Inflation Fuels Gen Z’s Financial Nihilism
After five years of persistent, high inflation, new data shows that so-called “financial nihilism” has taken root among America’s youth.
The term reflects a widespread sense of despondency among Gen Zers (born between 1997 and 2012) and millennials (born 1981 to 1996), especially when it comes to exploring important life events related to the American Dream.
When saving for a down payment or retirement feels futile, many young people are turning to risky strategies including cryptocurrencies, meme stocks and sports betting to try to get ahead, according to the annual Northwestern Mutual Planning and Progress survey released Monday.
“When people feel behind, they tend to look for shortcuts,” said John Roberts, CEO of Northwestern Mutual, in a report. “But building financial security isn’t usually about prevention. It’s about consistency, discipline and protection.”
Economic problems fuel financial indifference
Northwestern Mutual’s research cites inflation and economic uncertainty as the basis for the fire’s lack of funding.
The survey found that more Americans (45%) expect the economy to get worse this year than those who expect it to improve (36%), and nearly 6 in 10 respondents said they believe inflation will continue to rise in 2026. Overall, inflation is “too high” cited as the No. 1 obstacle. 1 to achieve financial security.
And although these economic problems are felt by all generations, they especially affect the elderly.
For example, 73% of Americans who feel financially disadvantaged say that high-risk, speculative investments can help them reach their financial goals more effectively than traditional methods. The younger the respondent, the more likely they are to agree with that thought: 80% of Gen Z, 75% of millennials, 66% of Gen X (born 1965 to 1980) and 51% of baby boomers (born 1946 to 1964).
Economist Kyla Scanlon – a Gen Zer known for coining the popular economic term “vibecession” – explained in a recent article on The Wall Street Journal that young adults are looking for returns that a regular job or stock market can’t provide.
He wrote: “Young adults are not confused or hardened by the risks they are taking. They are responding to an economy where conventional advice no longer matches the results.”
The job market is particularly difficult for young workers, which may exacerbate the trend. The unemployment rate for young workers between the ages of 22 and 27 was about 8% as of December, according to the latest data from the New York Federal Reserve. For recent college graduates of the same age, the unemployment rate was 5.6%.
Considering that most Americans’ exposure to the stock market comes from retirement accounts through the workplace, the high youth unemployment rate keeps them out of the markets — and into risky investments.
Last year, an investment study from YouGov found that Gen Zers are four times more likely to own a crypto than a retirement account. For Dinon Hughes, a Gen Z financial planner, it makes sense. He previously told Money that he sees these trends playing out among his clients and peers alike.
“On that basis, what do you think a 20-year-old person is likely to do alone,” he said – open an individual retirement account or “make a few quick bucks with crypto?”
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