Local Investment Adviser on Financial Outlook 2015 and Beyond

By Helen A. Dietz

We’ve been in a funk for the past six years. The economy received a punch to the solar plexus and too many of us haven’t quite dusted ourselves off. As a nation, we just aren’t feeling the euphoria that would once have accompanied record stock prices, rapidly falling unemployment, and low, low interest rates.

But I sense change afoot. A new middle class is heading our way with a set of values in direct opposition to the previous rulers of the bourgeoisie. Millennials – a record 80 million strong—will soon be entering their prime working years. And they are re-defining the meaning of both prosperity and success. We are going from the ‘me generation’ to the ‘we generation’ -- from McMansions, and debt-fueled lifestyles to Airbnb, budgets, and the communal table. Policymakers, accustomed to basing decisions on consumption have yet to realize what this new economy really looks like.

The values have been shifting for more than a decade, largely in response to the global reality show I’d call Financial Mayhem, and including early episodes like The Russian Ruble Crisis and The Dot-Com Bubble. Then came a modern depression episode, The 2008 Meltdown, an accelerant for change-- much as the devastation of Hurricane Katrina transformed, even rejuvenated, New Orleans. Washington and Wall Street went into overdrive trying to preserve and resurrect what once was.

But young upstarts looked at our busted institutions and decided they wanted something new. They started paying for goods with a smartphone, skipping banks and lending money to one another, and creating whole new ways to share our lives and passions.

We are beginning to taste optimism. The traditional gauges of our well-being are looking up. Gross domestic product has grown more than 3.5% over four of the last five quarters and unemployment claims have hit a record low; asign that higher wages are likely around the corner.

But these are not the numbers that rule the millennial zeitgeist. Excessive consumption, the defining aspect of GDP, is not a millennial value. They are careful consumers, as the Wall Street Journal reports, whipping out their smartphones to compare prices and sticking hard to their lists. Home ownership is no longer the symbol of “making it” – a debt-free lifestyle is. This is gen Uber, aspiring to share, not own.

The New York Times reports that 875,000 more young adults are renting now than would have had pre-2008 trends continued. Necessity may have pushed them into renting, but this is no cause for dismay. The personal GDP measures production by the value of connections.

We are just at the start of this shift. Policymakers haven’t fully taken into account how this emerging middle class – bigger than the storied Baby Boomer generation -- is re-defining the economy. For three decades, baby boomers dominated our culture and our economy. Retail consumption has been part of our psyches as a key measure of prosperity.

How should we measure that going forward? Millennials appear to be choosing connections and satisfaction in experiences rather than things. They are far more likely by choice to juggle multiple jobs or move every few years or make up their own unique paths. They are fixing things on their own, bringing a new optimism to this country.

Psychological research confirms that experiences, not material goods, are what create happier lives. It seems like an obvious observation. Millennials may or may not “have” more than boomers, but they are laying the groundwork for greater satisfaction.

This holiday season, we should acknowledge the good that lies ahead – improving health, re-defining opportunities we didn’t even dream of six years ago – and take satisfaction in knowing that as a country we still have grit – even if we can’t put a number on it.

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Helen A. Dietz is President and CEO, of Mountain View-based Stanford Investment Group, Inc., an SEC registered investment adviser and FINRA/SIPC member broker dealer. No affiliation with Stanford University. The views, opinions and/or materials presented are solely those of Helen A. Dietz, and do not necessarily reflect the views or policies of Stanford Investment Group, Inc. This material does not constitute an offer to sell, solicitation of an offer to buy, recommendation to buy or representation as the suitability or appropriateness of any security or financial product.