The economic generation gap

Of course, there is a demographic story to the Facebook economy, since it trends young. The dynamics that are limiting the overall economy -- a lousy job market, high debt and stalled wages -- are hitting young adults hard. They've dealt with surging tuition costs: Since 1980, while the overall Consumer Price Index is up 194%, the college tuition component is up 829%. College students have turned to debt. The student debt clock run by the website FinAid recently topped $1 trillion.

Dunne paints an uncomfortable picture for the millennials. Mired in student debt and competing with people about their parents' age who are staying in the workforce, many young adults are taking menial jobs just to stay afloat, according to the Heldrich Center for Workforce Development at Rutgers. That's pinching their spending: 40% have delayed the purchase of a house or a car, 28% have put off more education, 27% have moved back in with their parents, and 14% have delayed marriage.

Remember that demographics play a critical role in the two most important asset markets for the U.S. economy: housing and the stock market. If young adults can't establish homesteads and build nest eggs, baby boomers looking to cash out will find a dearth of buyers willing to transform their homes and stocks into the cash they need to fund retirement.

That's why the housing market is still in the tank and why, based on funds-flow data, over the past three years private investors have been net redeemers of equities two-thirds of the time as they sell into rallies and rebalance into bonds and more-conservative assets. The boomers' increasing orientation toward capital preservation and risk aversion isn't being offset by risk-taking youngsters. It's no surprise, then, that the Standard & Poor's 500 Index ($INX) has yet to retake its 2000 or 2007 highs despite corporate profits running at record highs.

Not to be a party pooper, but until we get college grads off Facebook, off their parents' couches and out of their Gap hoodies, the economy doesn't really deserve a thumbs-up, if you know what I mean.

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