Here Comes the Recovery…in 2025???

They may not be as frugal as Depression-Era babies, but Gen Y is going through its own growing pains as the economic recovery grinds to a halt. And these changes will have a profound impact on the way retail operates, according to a recent article in Women’s Wear Daily.

Companies holding out for a consumer rebound could be waiting for years and find that by the time shoppers do come back, the rules of the game will have changed. That is likely to mean fewer retailers and stores, more e-commerce and mobile shopping — and an entire generation of consumers who are struggling to make ends meet.

“It could be up until 2020, 2025 until people get to a situation where they feel they can spend freely,” said Leon Nicholas, director of retail insights at Kantar Retail. “The debt overhang is so large for the American household that people simply can’t break free from it by changing a few behaviors.”

Generation Y shoppers, those ranging in age from 18 to 29 years old, are learning to live in leaner times, relying on their parents and deferring the parenthood and home ownership. Since spring 2007, the number of doubled-up households — which the Census Bureau defines as a household with someone older than 18 who is not in school and is not the householder or the householder’s partner — grew by 2 million to 21.8 million.

A total of 5.9 million 25- to 34-year-olds lived with their parents this spring. And although these adults had an official poverty rate of 8.4%, the Census Bureau said 45.3% of them would have qualified as impoverished if only their own incomes were taken into account.

The overall poverty rate — defined as an annual income of less than $11,139 for individuals under 65 and $22,314 for a family of four — rose to a 17-year high of 15.1% last year. That’s the third consecutive annual increase for the poverty rate, which has increased by 2.6 percentage points since 2007.