How do you sell cars to Millennials (aka Generation Y)? The fact is, today's young people simply don't drive like their predecessors did. In 2010, adults between the ages of 21 and 34 bought just 27 percent of all new vehicles sold in America, down from the peak of 38 percent in 1985. Miles driven are down, too. Even the proportion of teenagers with a license fell, by 28 percent, between 1998 and 2008.
Since World War II, new cars and suburban houses have powered the economy and propelled recoveries. Millennials may have lost interest in both.
Half of a typical family's spending today goes to transportation and housing, according to the latest Consumer Expenditure Survey, released by the Bureau of Labor Statistics. At the height of the housing bubble, residential construction and related activities accounted for more than a quarter of the economy in metro areas like Las Vegas and Orlando. Nationwide, new-car and new-truck purchases hovered near historic highs. But Millennials have turned against both cars and houses in dramatic and historic fashion. Just as car sales have plummeted among their age cohort, the share of young people getting their first mortgage between 2009 and 2011 is half what it was just 10 years ago, according to a Federal Reserve study.
When Zipcar was founded, in 2000, the average price for a gallon of gasoline was $1.50, and iPhones didn't exist. Since then, it has become the world's largest car-sharing company, with some 700,000 members. Zipcar owes much of its success to two facts. First, gas prices more than doubled, which made car-sharing alluring. Second, smartphones became ubiquitous, which made car-sharing easier.
The typical new car costs $30,000 and sits in a garage or parking spot for 23 hours a day. Zipcar gives drivers access to cars they don't have to own. Car ownership, meanwhile, has slipped down the hierarchy of status goods for many young adults. "Zipcar conducted a survey of Millennials," Mark Norman, the company's president and chief operating officer, told us. "And this generation said, 'We don't care about owning a car.' Cars used to be what people aspired to own. Now it's the smartphone."
Millennials, of course, are sharing more than transportation: they're also sharing living quarters, albeit begrudgingly, and with less gee-whiz technology involved. According to Harvard University's Joint Center for Housing Studies, between 2006 and 2011, the homeownership rate among adults younger than 35 fell by 12 percent, and nearly 2 million more of them-the equivalent of Houston's population-were living with their parents, as a result of the recession. The ownership society has been overrun by renters and squatters.
If the Millennials are not quite a post-driving and post-owning generation, they'll almost certainly be a less-driving and less-owning generation. That could mean some tough adjustments for the economy over the next several years. In recent decades, the housing industry has usually led us out of recession. When the Federal Reserve lowered interest rates in the midst of the sharp recession of the early 1980s, for instance, a construction boom helped fuel the "Reagan Recovery." With the housing market moribund, the Federal Reserve has lost a key means of influencing the economy with lower interest rates. The service-led recovery we've gotten instead is not nearly as robust.
"She was a royalist. In fact, the whole family are royalists," explained a neighbor, after the funeral.
"There are a few people like that in France. It isn't serious in the sense that no one really expects France to become a monarchy again. Some people just admire the English for their royal family. Especially when there are royal marriages. It's a kind of focus for the whole nation. And everyone seems to like the pageantry of it.
"And most people probably imagine a parliamentary system with a king at the head of it...like the Netherlands or Spain. But this family is a little special. They want an absolute monarchy."
"Well, there is something to be said for monarchy," said another person at our table. At least, it is much clearer and more honest. In a democracy, such as we have here in France, you don't really know who's in charge...or what they really want. The voters think they are in charge, but they have no real idea of what is going on. They get tired of one party and they switch to the other. The real deals are made behind the scenes.
"Yes, democracy is a fraud. The voters think they are in charge. But they're not. "
"And I don't know if it would be any better if they really were in charge," another friend added. "I mean, just because you can get a majority of dumbbells to vote for something doesn't make it right. Remember that both Hitler and Mussolini began by getting elected.
"I don't even understand the idea of it. I mean theoretically. What gives the majority the right to tell everyone what to do? At least, with a monarch there's a kind of logic to it. The people obey the king. The king obeys God. Good kings were good. Bad kings were bad."
"There's another way in which a king may be better," we volunteered. "The voters, especially old voters, have now realized that they can vote themselves more money - more healthcare and more pension benefits, usually. No candidate for president can tell them the truth - that we can't afford to give them the benefits they're getting now. So, the system just keeps going...until it finally blows up.
"At least, a monarch - who didn't have to face re-election - would be able to do what needs to be done."
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.