How Millenials Could Make the Fed’s Job Harder
WASHINGTON — “They say millennials are lazy,” billboards plastered across 15 major cities declared last summer. “Retire early and prove them right.”
That sentiment, reflected in ads for the investment manager Prudential, is the stuff of a 30-year-old’s fantasy — and the Federal Reserve’s nightmare.
A young generation of aggressive savers could leave central bankers with less room to cut interest rates, which they have long done to boost growth in times of economic trouble.
To leave the work force early, millennials would need to build up massive retirement funds and consume less in the process. That hit to demand could slow growth and force rates to drop ever lower to entice spending. And if today’s workers actually managed to retire young, it would exacerbate the situation by shrinking the labor force, further weighing on the economy’s potential.