Finance

Economists and strategists now see the Fed waiting until at least September to cut interest rates and are increasingly entertaining the possibility of no reductions at all this year.
Bank of America economists said there is a “real risk” that the Fed won’t cut until March 2025 “at the earliest,” though for now they’re still going with a December forecast.
Hope remains that the inflation data turns lower in the next few months and gives the Fed room to ease.

Federal Reserve Chair Jerome Powell speaks during a House Financial Services Committee hearing on the “Federal Reserve’s Semi-Annual Monetary Policy Report” on Capitol Hill in Washington, U.S., March 6, 2024. 
Bonnie Cash | Reuters

If there was any doubt before, Federal Reserve Chair Jerome Powell has pretty much cemented the likelihood that there won’t be interest rate reductions anytime soon.
Now, Wall Street is wondering if the central bank will cut at all this year.

That’s because Powell on Tuesday said there’s been “a lack of further progress” on lowering inflation back to the Fed’s 2% target, meaning “it’s likely to take longer than expected” to get enough confidence to start easing back on policy.
“They’ve got the economy right where they want it. They now are just focused on inflation numbers. The question is, what’s the bar here?” said Mark Zandi, chief economist at Moody’s Analytics. “My sense is they need two, probably three consecutive months of inflation numbers that are consistent with that 2% target. If that’s the bar, the earliest they can get there is September. I just don’t see rate cuts before that.”
With most readings putting inflation around 3% and not moving appreciably for several months, the Fed finds itself in a tough slog on the last mile toward its goal.
Market pricing for rate cuts has been highly volatile in recent weeks as Wall Street has chased fluctuating Fed rhetoric. As of Wednesday afternoon, traders were pricing in about a 71% probability that the central bank indeed most likely will wait until September, with the implied chance of a July cut at 44%, according to the CME Group’s FedWatch gauge.
As for a second rate cut, there was a tilt toward one in December, but that remains an open question.

“Right now, my base case is two — one in September and one in December, but I could easily see one rate cut, in November,” said Zandi, who thinks the presidential election could factor into the equation for Fed officials who insist they are not swayed by politics.

‘Real risk’ of no cuts until 2025

The uncertainty has spread through the Street. The market-implied odds for no cuts this year stood around 11% on Wednesday, but the possibility can’t be ignored at this point.
For instance, Bank of America economists said there is a “real risk” that the Fed won’t cut until March 2025 “at the earliest,” though for now they’re still going with a December forecast for the one and only cut this year. Markets at the onset of 2024 had been pricing in at least six quarter-percentage point reductions.
“We think policymakers will not feel comfortable starting the cutting cycle in June or even September,” BofA economist Stephen Juneau said in a client note. “In short, this is the reality of a data-dependent Fed. With the inflation data exceeding expectations to start the year, it comes as little surprise that the Fed would push back on any urgency to cut, especially given the strong activity data.”
To be sure, there’s still hope that the inflation data turns lower in the next few months and gives the central bank room to ease.
Citigroup, for example, still expects the Fed to begin easing in June or July and to cut rates several times this year. Powell and his fellow policymakers “will be pleasantly surprised” by inflation data in coming months, wrote Citi economist Andrew Hollenhorst, who added that the Fed “is poised to cut rates on either slower year-on-year core inflation or any signs of weakness in activity data.”
Elsewhere, Goldman Sachs pushed back the month that it expects policy to ease, but only to July from June, as “the broader disinflationary narrative remains intact,” wrote Jan Hatzius, the firm’s chief economist.

Danger looms

If that is true, then “the pause on rate cuts would be lifted and the Fed would move ahead,” wrote Krishna Guha, head of the global policy and central bank strategy team at Evercore ISI. However, Guha also noted the wide breadth of policy possibilities that Powell opened in his remarks Tuesday.
“We think it still leaves the Fed uncomfortably data-point dependent, and highly vulnerable to being skittled from three to two to one cut if near-term inflation data does not cooperate,” he added.
The possibility of a stubborn Fed raises the possibility of a policy mistake. Despite the resilient economy, higher rates for longer could threaten labor market stability, not to mention areas of the finance sector such as regional banks that are susceptible to duration risk posed to fixed income portfolios.
Zandi said the Fed already should have been cutting with inflation well off the boil from its mid-2022 highs, adding that factors related to housing are essentially the only thing standing between the central bank and its 2% inflation goal.
A Fed policy mistake “is the most significant risk to the economy at this point. They’ve already achieved their mandate on full employment. They’ve all but achieved their mandate on inflation,” Zandi said.
“Stuff happens, and I think we need to be humble here regarding the financial system,” he added. “They run the risk they are going to break something. And to what end? If I were on the committee, I would be strongly arguing we should go already.”

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When Iran’s missiles whizzed towards Israel on Sunday April 14th, oil markets were closed. When they opened 24 hours later, their reaction was a loud “meh”. Brent crude, the global benchmark, dipped below $90 a barrel. It has since hovered around that level (see chart).Chart: The EconomistTraders had expected an attack of precisely this variety: big enough to cause concern; obvious enough to be foiled. They are now betting that Israel will avoid anything too rash in response. Yet even if oil prices do not surge, they remain uncomfortably elevated and seem likely to rise higher still in the summer, when increasing demand amid tight supply will probably tip the market into deficit. A cast of decision-makers—from central bankers to President Joe Biden, who faces re-election in November—is watching anxiously.Geopolitical risk explains, in part, why oil prices have risen by a quarter since December. Brent passed $90 for the first time in nearly six months after Israel bombed Iran’s consulate in Damascus on April 1st. Supply disruptions are playing an even bigger role. Mexico is slashing shipments in order to produce more petrol at home. A leaky Scottish pipeline was forced to close. Turmoil in Libya is disrupting output; war in South Sudan could do the same.Meanwhile, tougher sanctions on Russia are leaving more of its oil stranded. In March refiners in India—Russia’s second-biggest buyer since 2022—said they would no longer welcome tankers owned by Sovcomflot, Russia’s state-owned shipping firm, for fear of Western retribution. Most of the 40-odd tankers subject to sanctions by America since October have not gone on to load Russian oil. The reimposition of sanctions on Venezuela could further dent supply. America may also decide to better police its existing embargo on Iran’s oil sales.The biggest supply disruption is deliberate. It is coming from the Organisation of the Petroleum Exporting Countries and its allies (OPEC+). In November the group pledged to slash output by 2.2m barrels a day (b/d), or 2% of global production. Most observers had expected that, with prices likely to rise throughout 2024, members would take the chance to row back on the cuts. Instead, several announced in March that they would extend them until the end of June. Russia even said it would deepen its cuts by another 471,000 b/d, reducing output to 9m b/d, from 10.8m b/d pre-war.Chart: The EconomistLast year supply growth outside the cartel more than made up for the rise in demand. This year non-OPEC output will rise again—Brazil and Guyana are expected to pump record amounts—but growth will slow. Global oil stocks are already falling; they will shrink faster this summer, as holidaymakers in America take to the road.All this is happening in the face of robust demand. Measures of manufacturing activity in America, China and Europe have surprised on the upside, leading the International Energy Agency, an official forecaster, to predict that global crude demand will rise by an average of 1.2m b/d this year, up from the 900,000 b/d it suggested in October. Others, including some big traders and OPEC itself, reckon demand growth may near or surpass 2m b/d.Where will the oil price go next? If OPEC+ keeps its cuts unchanged, it could reach $100 within months. But that is not an outcome the cartel really wants. Many members, not least Saudi Arabia, worry that a rapid rise in the oil price could destroy demand. Dearer crude is pushing American petrol prices, already at $3.60 a gallon, closer to $4. A surge past that point could shave 200,000 b/d off petrol demand over the summer, estimates JPMorgan Chase, a bank. Thus OPEC+ may signal its intention to produce more at its next meeting. Jorge León, a former OPEC analyst now at Rystad Energy, a consultancy, expects crude to average $90 a barrel in the third quarter of the year and $89 in the final quarter. Futures markets are even more sanguine: buying crude for delivery in December costs around $85 a barrel.Black cloudEven if the tit-for-tat between Israel and Iran escalates, it is unlikely to change much. Any reduction in Iran’s exports—worth 1.6m b/d in March—might be balanced by more pumping from the rest of OPEC. In a worst-case scenario, Iran could decide to close the Strait of Hormuz, a waterway that connects the Gulf to the Indian Ocean, through which 30% of the world’s seaborne oil, and nearly all of the Gulf’s, must pass. Doing so would anger just about everyone in the region, and cut off Iran from its sole oil buyer: China. Perhaps Iran would opt to cause trouble in less self-harming ways, such as harassing ships in the Gulf. Yet even the “tanker war” of the 1980s—when hundreds of tankers were attacked—failed to durably boost prices.The most likely scenario, therefore, is that oil prices remain tolerable to the world economy, at somewhere in the region of $85-90 a barrel, while allowing OPEC members to earn juicy margins. Prices are unlikely to fall soon, though. And whether such a level is tolerable to American voters, who see gasoline prices advertised in big red numbers by the highway every day, is another matter entirely. ■ More

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Regional bank earnings may expose critical weaknesses, according to Sheila Bair, former chair of the U.S. Federal Deposit Insurance Corp.
Their quarterly numbers begin hitting Wall Street this week.

“I’m worried about a handful of them,” Bair told CNBC’s “Fast Money” on Tuesday. “I think some of them are still overly reliant on industry deposits, have a lot of concentrated commercial real estate exposure, and then I think the larger picture really is the potential instability of their uninsured deposits even for the healthy ones if we have another bank failure.”
Bair, who ran the FDIC during the 2008 financial crisis, is nervous that regional bank issues from 2023 aren’t fully resolved.
“Congress should reinstate the FDIC’s transaction account guarantee authority so that they can stabilize those deposits,” she said. “This is still a problem for the regional banks, and fingers crossed that there’s [not] another failure. We’re just not quite sure what’s going to happen.”
Regional banks are having a tough year so far. The SPDR S&P Regional Bank ETF (KRE) is down almost 13%, and only four of its members are positive for 2024.
The biggest laggard in the KRE is New York Community Bancorp which has tumbled more than 71% this year. Metropolitan Bank Holding Corp., Kearny Financial, Columbia Banking System and Valley National Bancorp are down more than 30% in that time period.

“The big issue is whether there is another shock to uninsured deposits because of a bank failure, and I think that is really the biggest challenge confronting regional banks right now,” she said.
Her latest regional bank warning comes as the benchmark 10-year Treasury note yield topped 4.6% this week and hit its highest level since November 2023.
Bair is concerned higher yields could put more stress on commercial real estate borrowers, and regional banks have a lot of exposure.
“Part of the problem in commercial real estate is that a lot of it is refinancing this year and next,” said Bair. “So, the higher the rates go for those refinancings, the more distress there will be with borrowers to be able to continue with their payments.”
However, regional banks’ issues could bring more business to larger institutions.
“Regional bank distress benefits the big money-center banks. There’s no doubt in my mind,” Bair said.
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K-pop stocks have taken a beating this year, with JYP Entertainment shares leading losses in the sector and shedding a third of its market value.
Goldman Sachs attributes this to investors focusing on album sales, which have fallen off in the second half of 2023.
The firm instead recommends evaluating these companies by in-person concert attendance, noting Japan will be a key growth market on this metric.

CHICAGO, ILLINOIS – AUGUST 03: (L – R) Danielle, Hyein, Hanni, Minji and Haerin of NewJeans perform in concert during Lollapalooza at Grant Park on August 03, 2023 in Chicago, Illinois.
Gary Miller | Filmmagic | Getty Images

It hasn’t been an easy start to the year for investors in the K-pop sector as lower fourth-quarter sales and profits, as well as dating scandals, hit stock prices.
Goldman Sachs, however, expressed optimism for the industry in a March 14 report, saying the K-pop sector is “misunderstood.”

Shares of K-pop’s “big four” companies have all fallen since the start of the year. JYP Entertainment’s stock has plunged over 37% year to date, while YG Entertainment shed nearly 17%. Kospi-listed Hybe, home of superstars BTS, saw a smaller drop of about 4.5%.
Shares of SM Entertainment have plunged over 17%. The decline comes as one of the agency’s artists was embroiled in a dating scandal that drew widespread international and domestic coverage.
In February, the stock fell for five straight sessions to its lowest level since October 2022 following the drama surrounding Karina, the leader of girl group Aespa. The sell-off wiped $50 million off SM’s market value as Chinese fans threatened to boycott the group’s albums.

Nonetheless, Goldman Sachs said it sees a “high potential for valuation re-rating,” as companies still continue to deliver multi-year earnings growth. For 2023, all four companies posted higher full-year revenue and net profits.

A superior valuation metric

Goldman said the sell-off is tied to markets focusing on album sales, which has historically been considered a key proxy for the number of fans and, by extension, prospects for the companies.

“We challenge this mainstream mindset, arguing that offline concert audience… is the superior metric to measure the growing reach of K-pop,” the analysts wrote. They explained album sales can be tainted by wallet share, where one fan can buy multiple albums — a common occurrence among the K-pop fanbase.
The analysts also said album sales spiked during the pandemic due to the lack of offline interactions, which distorted the metric in relation to fans.

Japan to power short-term growth

When evaluating the industry by in-person concert attendance, Goldman said “growth has not stopped scaling at a rapid pace,” and “in the near term, we see audience growth in Japan as the key growth driver.”
The analysts see a substantial fanbase growth opportunity for K-pop companies in the near-term in Japan, “which we believe is being overlooked by the market.”

They note Japan has been one of the largest overseas fanbases for K-pop, with Hybe, SM and JYP taking a combined 7% of the live music market in Japan. Goldman pointed out that Japan’s top talent agency Johnny & Associates has been mired in a major scandal, leading to the industry turning more favorable to K-pop artists.
In 2023, Kouhaku Uta Gassen, the largest music show in Japan, invited five K-pop artists and two localized groups produced by K-pop companies. It was the first time the show has featured male K-pop artists since 2011 and the largest number of K-pop groups ever featured in its line up.
Goldman estimated Japan concert audiences will grow at a 24% compounded annual growth rate from 2023 to 2026, with the combined share for Hybe, JYP and SM doubling from 7% to 14%.
Catalysts for growth in Japan include SM’s newest Japanese boy group NCT Wish as well as JYP’s upcoming boy group NEXZ.

The global fanbase

Goldman is also bullish on K-pop’s global fanbase growth, especially in markets like the U.S.

The report pointed to the success of Hybe-managed girl group NewJeans on U.S. charts. In a March 27 report, analysts noted NewJeans’ most recent album hit No. 1 on the U.S. Billboard 200. The group’s lead single, “Super Shy,” charted at No. 2 on the Billboard Global 200.
The group also was the first South Korean girl group to perform at Lollapalooza. The Chicago Sun Times reported the group may have managed to draw the biggest audience ever for the festival’s 5 p.m. slot.
Le Sserafim, managed by Hybe subsidiary Source Music, also made their debut at the Coachella music festival on April 13, with another show scheduled for April 20.
Hybe also recently announced that it will expand its partnership with Universal Music Group, including exclusive distribution rights for Hybe’s artists and labels. UMG’s roster includes Taylor Swift, Ariana Grande and Justin Bieber.
Goldman said the announcement is a visible sign that K-pop is becoming mainstream globally, leading to a competitive position that allows stronger bargaining power in business relationships.
The analysts concluded there’s “a long runway of growth ahead” for the sector, adding that “further downside for wallet share, which has normalized close to pre-Covid levels, seems limited, in our view.” More

Fed Chair Jerome Powell said the U.S. economy has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said during a central banking forum.

Federal Reserve Chair Jerome Powell speaks during a press conference following a closed two-day meeting of the Federal Open Market Committee on interest rate policy at the Federal Reserve in Washington, D.C., on Dec. 13, 2023.
Kevin Lamarque | Reuters

Federal Reserve Chair Jerome Powell said Tuesday that the U.S. economy, while otherwise strong, has not seen inflation come back to the central bank’s goal, pointing to the further unlikelihood that interest rate cuts are in the offing anytime soon.
Speaking to a policy forum focused on U.S.-Canada economic relations, Powell said that while inflation continues to make its way lower, it hasn’t moved quickly enough, and the current state of policy should remain intact.

“More recent data shows solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal,” the Fed chief said during a panel talk.
Echoing recent statements by central bank officials, Powell indicated the current level of policy likely will stay in place until inflation gets closer to target.
Since July 2023, the Fed has kept its benchmark interest rate in a target range between 5.25%-5.5%, the highest in 23 years. That was the result of 11 consecutive rate hikes that began in March 2022.
“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” he said. “That said, we think policy is well positioned to handle the risks that we face.”
Powell added that until inflation shows more progress, “We can maintain the current level of restriction for as long as needed.”

The comments follow inflation data through the first three months of 2024 that has been higher than expected. A consumer price index reading for March, released last week, showed inflation running at a 3.5% annual rate — well off the peak around 9% in mid-2022 but drifting higher since October 2023.
Treasury yields rose as Powell spoke. The benchmark 2-year note, which is especially sensitive to Fed rate moves, briefly topped 5%, while the benchmark 10-year yield rose 3 basis points. The S&P 500 wavered after Powell’s remarks, briefly turning negative on the day before recovering.

Stock chart icon

10-year and 2-year yields

Powell noted the Fed’s preferred inflation gauge, the personal consumption expenditures price index, showed core inflation at 2.8% in February and has been little changed over the past few months.
“We’ve said at the [Federal Open Market Committee] that we’ll need greater confidence that inflation is moving sustainably towards 2% before [it will be] appropriate to ease policy,” he said. “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.”
Financial markets have had to reset their expectations for rate cuts this year. At the start of 2024, traders in the fed funds futures market were pricing in six or seven cuts this year, starting in March. As the data has progressed, the expectations have shifted to one or two reductions, assuming quarter percentage point moves, and not starting until September.
In their most recent update, FOMC officials in March indicated they see three cuts this year. However, several policymakers in recent days have stressed the data-dependent nature of policy and have not committed to set level of reductions.
Correction: Powell’s comments follow inflation data through the first three months of 2024 that has been higher than expected. An earlier version misstated the year.

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The question of who should pay for a first date can be stressful.
The man should generally pay when it comes heterosexual couples, according to dating experts.
That is largely because men are often the ones asking to go on the date.

Janina Steinmetz | Digitalvision | Getty Images

When it comes to dating etiquette, one question seems to inspire more anxiety than most: Who pays for the first date?
Dating experts think there is a clear answer for heterosexual couples.

“The man should pay for the first date,” said Blaine Anderson, a dating coach for men. Erika Ettin, an online dating coach, agrees.
“I recommend my male clients pay and my female clients offer,” said Ettin, the founder of A Little Nudge. Men should politely decline that offer, unless the woman insists, in which case the man should accept it, Ettin added.
The etiquette “shouldn’t be that complicated,” she said.

Public opinion is more or less in line with what dating experts say. Most Americans, 72%, say a man should pay for the first date, according to a recent NerdWallet survey. About 68% of adults stress about their finances when organizing a date, and 69% said they have felt uncomfortable on dates because of how much it will cost, according to a recent Self Financial poll.
Whoever pays, the average person pays $77 for a first date, according to a LendingTree survey. That adds up. The average man paid $861 on dates in 2019 while the average woman spent $500, LendingTree found.

“Plan something that’s within your budget,” said Anderson, founder of Dating By Blaine.
“If you’re concerned about cost, you have planned a date that is too expensive,” Anderson added. Feeling the need to go to a fancy dinner to impress your date means “you’re approaching the date wrong,” she said.

Why dating experts think men should pay

Damircudic | E+ | Getty Images

Historically, men were expected to cover the bill due to traditional roles of men as household breadwinners and women as caregivers for children, said Carli Blau, a couples and dating therapist.
While society has changed tremendously, men likely still feel a subconscious need to pay as a gesture of financial security, said Blau, founder of Boutique Psychotherapy.
Indeed, men are more likely to think they should pay for a first date than women, at 78% versus 68%, according to the NerdWallet poll.
Proponents of men picking up the tab sometimes point to ongoing financial factors such as a persistent gender wage gap as a key rationale.
More from Personal Finance:People are spending hundreds a month on dating appsThis matchmaker’s fee can top $500,000He asked for his money back after a first date
But dating experts often use a different logic: The person who asks for the date should generally treat — and that is typically the man in American society, Ettin said.
The same calculus holds for same-sex couples: Whoever asks should break out their wallet, she said.
“I think it’s not a matter of ‘the guy should pay for it,’ but rather who’s courting who?” Blau said.
In heterosexual couples, 53% of men say they asked for the first date versus 15% of women, according to a poll by the Institute for Family Studies.

The one who pursues a romantic interest and chooses where to take their date is expected to pay, Blau added.
That means a woman should be prepared to pay if she asks a guy out, Ettin said. However, she advises men to still be prepared to cover the tab.
There is also some romantic strategy here. Covering the bill gives the man “the best possible shot at the second date, if he likes her,” Anderson said.
Yes, it is the traditional expectation, but it is also a nice gesture, she added. The advice is not contrary to the notion of equality and feminism, Ettin said. “We still want that,” she said. “But it feels nice to be treated sometimes.”
“I do believe that equality and feminism and chivalry can all exist at the same time,” Ettin said.

When to split the bill

Additionally, splitting the bill feels “extremely tacky and friend zone-ish,” Ettin said.
Women interested in a second date can instead suggest they treat next time, she said.
Women who do offer to pay should not be mad if men accept, experts said.
“Don’t go call a friend or me as a therapist and complain afterwards they took you up on it,” Blau said.
“In this place of equality and women wanting to be treated equally — as we should be — if we go to pay, it also could be considered disrespectful if the man says, ‘No, I’ll take care of it.’ Then it becomes a power dynamic,” she added.

If you’re concerned about cost, you have planned a date that is too expensive.

Blaine Anderson
Dating coach

Some women may feel the need to split the check if they know they do not want a second date. However, experts somewhat diverged on this etiquette.
“I don’t think it’s a requirement,” but it is polite to offer to pay in such cases, Anderson said.
Ettin does not think payment should be tied to how well a date went, though.
“All you owe them is a thank you,” she said. “That’s it — a genuine thank you.”

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Generation Z is taking over. In the rich world there are at least 250m people born between 1997 and 2012. About half are now in a job. In the average American workplace, the number of Gen Zers (sometimes also known as “Zoomers”) working full-time is about to surpass the number of full-time baby-boomers, those born from 1945 to 1964, whose careers are winding down (see chart 1). Gen Z is also grabbing power: America now has more than 6,000 Zoomer chief executives and 1,000 Zoomer politicians. As the generation becomes more influential, companies, governments and investors need to understand it.Pundits produce a lot of fluff about the cohort. Recent “research” from Frito-Lay, a crisp-maker, finds that Gen Zers have a strong preference for “snacks that leave remnants on their fingers”, such as cheese dust. Yet different generations also display deeper differences in their personalities, in part due to the economic context in which they grow up. Germans who reached adulthood during the high-inflation 1920s came to detest rising prices. Americans who lived through the Depression tended to avoid investing in the stockmarket.Chart: The EconomistMany argue that Gen Z is defined by its anxiety. Such worriers include Jonathan Haidt, a social psychologist at New York University, whose new book, “The Anxious Generation”, is making waves. In some ways, Gen Zers are unusual. Young people today are less likely to form relationships than those of yesteryear. They are more likely to be depressed or say they were assigned the wrong sex at birth. They are less likely to drink, have sex, be in a relationship—indeed to do anything exciting. Americans aged between 15 and 24 spend just 38 minutes a day socialising in person on average, down from almost an hour in the 2000s, according to official data. Mr Haidt lays the blame on smartphones, and the social media they enable.His book has provoked an enormous reaction. On April 10th Sarah Huckabee Sanders, the governor of Arkansas, echoed Mr Haidt’s arguments as she outlined plans to regulate children’s use of smartphones and social media. Britain’s government is considering similar measures. But not everyone agrees with Mr Haidt’s thesis. And the pushing and shoving over Gen Z’s anxiety has obscured another way in which the cohort is distinct. In financial terms, Gen Z is doing extraordinarily well. This, in turn, is changing the generation’s relationship with work.Consider the group that preceded Gen Z: millennials, who were born between 1981 and 1996. Many entered the workforce at a time when the world was reeling from the global financial crisis of 2007-09, during which young people suffered disproportionately. In 2012-14 more than half of Spanish youngsters who wanted a job could not find one. Greece’s youth-unemployment rate was even higher. Britney Spears’s “Work Bitch”, a popular song released in 2013, had an uncompromising message for young millennials: if you want good things, you have to slog.Gen Zers who have left education face very different circumstances. Youth unemployment across the rich world—at about 13%—has not been this low since 1991 (see chart 2). Greece’s youth-unemployment rate has fallen by half from its peak. Hoteliers in Kalamata, a tourist destination, complain about a labour shortage, something unthinkable just a few years ago. Popular songs reflect the zeitgeist. In 2022 the protagonist in a Beyoncé song boasted, “I just quit my job”. Olivia Rodrigo, a 21-year-old singer popular with American Gen Zers, complains that a former love interest’s “career is really taking off”.Chart: The EconomistMany have chosen to study subjects that help them find work. In Britain and America Gen Zers are avoiding the humanities, and are going instead for more obviously useful things like economics and engineering. Among those who do not attend university, vocational qualifications are increasingly popular. Then they go on to benefit from tight labour markets. Young people, following Beyoncé’s protagonist, can quit their job and find another one if they want more money.In America hourly pay growth among 16- to 24-year-olds recently hit 13% year on year, compared with 6% for workers aged 25 to 54. This was the highest “young person premium” since reliable data began (see chart 3). In Britain, where youth pay is measured differently, last year people aged 18 to 21 saw average hourly pay rise by an astonishing 15%, outstripping pay rises among other ages by an unusually wide margin. In New Zealand the average hourly pay of people aged 20 to 24 increased by 10%, compared with an average of 6%.Chart: The EconomistStrong wage growth boosts family incomes. A new paper by Kevin Corinth of the American Enterprise Institute, a think-tank, and Jeff Larrimore of the Federal Reserve assesses Americans’ household income by generation, after accounting for taxes, government transfers and inflation (see chart 4). Millennials were somewhat better off than Gen X—those born between 1965 and 1980—when they were the same age. Zoomers, however, are much better off than millennials were at the same age. The average 25-year-old Gen Zer has an annual household income of over $40,000, more than 50% above the average baby-boomer at the same age.Gen Z’s economic power was on display at a recent concert by Ms Rodrigo in New York. The mostly female teenagers and 20-somethings in attendance had paid hundreds of dollars for a ticket. Queues for merchandise stalls, selling $50 t-shirts, stretched around the arena. Ms Rodrigo will have no trouble shifting merchandise in other parts of the world, as her tour moves across the Atlantic. That is in part because Gen Zers who have entered the workplace are earning good money throughout the rich world. In 2007 the average net income of French people aged 16 to 24 was 87% of the overall average. Now it is equal to 92%. In a few places, including Croatia and Slovenia, Gen Zers are now bringing in as much as the average.Some Gen Zers protest, claiming that higher incomes are a mirage since they do not account for the exploding cost of college and housing. After all, global house prices are close to all-time highs, and graduates have more debt than before. In reality, though, Gen Zers are coping because they earn so much. In 2022 Americans under 25 spent 43% of their post-tax income on housing and education, including interest on debt from college—slightly below the average for under-25s from 1989 to 2019. Their home-ownership rates are higher than millennials at the same age. They also save more post-tax income than youngsters did in the 1980s and 1990s. They are, in other words, better off.Chart: The EconomistWhat does this wealth mean? It can seem as if millennials grew up thinking a job was a privilege, and acted accordingly. They are deferential to bosses and eager to please. Zoomers, by contrast, have grown up believing that a job is basically a right, meaning they have a different attitude to work. Last year Gen Zers boasted about “quiet quitting”, where they put in just enough effort not to be fired. Others talk of “bare minimum Monday”. The “girlboss” archetype, who seeks to wrestle corporate control away from domineering men, appeals to millennial women. Gen Z ones are more likely to discuss the idea of being “snail girls”, who take things slowly and prioritise self-care.The data support the memes. In 2022 Americans aged between 15 and 24 spent 25% less time on “working and work-related activities” than in 2007. A new paper published by the IMF analyses the number of hours that people say they would like to work. Not long ago young people wanted to work a lot more than older people. Now they want to work less. According to analysis by Jean Twenge of San Diego State University, the share of American 12th-graders (aged 17 or 18) who see work as a “central part of life” has dropped sharply.Another consequence is that Gen Zers are less likely to be entrepreneurs. We estimate that just 1.1% of 20-somethings in the EU run a business that employs someone else—and in recent years the share has drifted down. In the late 2000s more than 1% of the world’s billionaires, as measured by Forbes, a magazine, were millennials. Back then pundits obsessed over ultra-young tech founders, such as Mark Zuckerberg (Facebook), Patrick Collison (Stripe) and Evan Spiegel (Snapchat). Today, by contrast, less than 0.5% on the Forbes list are Zoomers. Who can name a famous Gen Z startup founder?Gen Zers are also producing fewer innovations. According to Russell Funk of the University of Minnesota, young people are less likely to file patents than they were in the recent past. Or consider the Billboard Hot 100, measuring America’s most popular songs. In 2008 42% of hits were sung by millennials; 15 years later only 29% were sung by Gen Zers. Taylor Swift, the world’s most popular singer-songwriter, titled her most famous album “1989”, after the year of her birth. The world is still waiting for someone to produce “2004”.How long will Generation Z’s economic advantage last? A recession would hit young people harder than others, as recessions always do. Artificial intelligence could destabilise the global economy, even if youngsters may in time be better placed to benefit from the disruption. For now, though, Generation Z has a lot to be happy about. Between numbers at Madison Square Garden, Olivia Rodrigo sits at the piano and counsels her fans to be thankful for all that they have. “Growing up is fucking awesome,” she says. “You have all the time to do all the things you want to do.” The time and the money. ■ More

Source: Finance – cnbc.com More