Generation Precarious: How young people wound up trapped in a volatile cycle of saving, spending, and debt that will haunt them for decades

How young people wound up trapped in a volatile cycle of saving, spending, and debt that will haunt them for decades

Bruno Solari wanted to stay in shape, but there was only one problem: All the gyms were closed.

Back in April 2020, Solari wasn't the only one with this dilemma — a lot of people had free time on their hands and a sudden desire to shape up. Of course, it was the height of the pandemic, and he couldn't get swole in an exercise class. And buying exercise equipment from a store? Forget it. When he and a friend went to Dick's Sporting Goods, the shelves were already empty.

"Dumbbells were basically nonexistent and a commodity — supply-chain issues were hitting before the supply-chain issues were a real thing," Solari, a 29-year-old vice president for a New York-based PR firm, told me.

After scouring the internet for hours, Solari finally struck gold — an online classified ad offering a pair of Bowflex dumbbells for $300. The purchases did come with a catch: The current owner wanted to meet in a parking lot 45 minutes from Solari's home in Miami to make the masked and socially distanced exchange. He left the exchange with a lighter wallet but two dumbbells richer. The purchase — alongside a self-proclaimed addiction to using the Nike app during backyard workouts — made Solari feel like he was taking control of at least one thing during a chaotic time.

Solari, who described himself as "notorious for going out a lot" pre-pandemic, was one of the millions of Americans adapting to an abrupt lifestyle change. All of a sudden, he wasn't buying rounds of shots and sweating it out on the dance floor. Instead, he was saving his money and only occasionally splurging on workout clothes and equipment. Solari's forced frugality was just the first swing of a pandemic economy that jerked him between periods of abundance and scarcity. As the world reopened, Solari entered a new phase: The post-vaccine excitement ushered in what he called his "feral era." 

"I don't even know how we partied like that, but we really made up for lost time. It was absolutely insane," he said. But after racking up an uncomfortable amount of credit-card debt, Solari took on a third financial identity: sending out a spreadsheet to his friends outlining how much they owed him.

"Now I'm kind of like, all right, I need to brace myself for the future and reach some of my own personal goals financially," he said. "That's kind of where my head is at."

Solari wasn't the only American to veer wildly between frugality and all-out spending sprees during the pandemic. For millions of Americans, the past few years have redefined their relationship to money and their finances — perhaps permanently. In particular, younger people — Gen Z and millennials — have seen the early parts of their careers and critical years of their financial lives defined by the shifting sands of the pandemic economy. Just as previous generations' view of the world was defined by cataclysmic events, experts say that the scars of the pandemic-era relationship with money run deep, and as overlapping crises only intensify in the next few decades, those financial behaviors will stick around. Meet Generation Precarious.

Spending for control

Jamie Feldman, a 34-year-old freelance writer, had never really been an online shopper before the pandemic. But when it hit, she began to feel like she could splurge a bit more — amid the uncertainty of empty shelves and an emptier social calendar, it was appealing to have access to something that was a sure bet.

"I was like, I can buy something and it will come," she said. "I can still have that sense of 'this still works.'"

A 2020 study supports what Feldman felt, finding that stressful events, like the quick but painful recession that lasted from March to April 2020, can lead to a perceived lack of control. Feeling powerless and adrift in your circumstances weighs on mental health and makes you feel more distressed. To counteract that, many people try to find activities that give them a sense of control back. And Feldman wasn't the only one turning to shopping. Real personal-consumption expenditures — the best measure of Americans' aggregate consumer spending — plummeted in April 2020. But as people began to settle into their lockdown reality, the spending spigots reopened. By March 2021, consumer spending exceeded pre-pandemic levels, and it kept climbing to a record high of nearly $14.4 trillion by January.

"People who were sort of just average shoppers before COVID, it seems that some of them just tipped over the edge and became compulsive. When you think about it, that's not surprising, because COVID was so fearful and uncertain and held us captive," Carrie Rattle, a financial therapist and coach for professional women and couples, told me. "Shopping was one of the only means to self-soothe, or escape, or take control of our lives, right? When you shop, you get a dopamine hit. So it's easy to build a new habit almost overnight when it's pleasurable."

But all this spending eventually caught up to Feldman. By July last year, she had racked up roughly $20,000 in debt, fueled in part by her pandemic purchases. After she was laid off from an on-staff role in March 2021, Feldman was forced to reckon with the financial mess she had created.

"I'd been living with this debt, and sort of ignoring it and pushing it away thinking like, if I just stopped, if I never acknowledged it, one day, it would maybe magically disappear," she said. "And I think getting laid off certainly had a lot to do with getting to this breaking point."

Other young people were also racking up debt. Millennials' debt shot up by 27% to $3.8 trillion from 2019 to the end of 2022, according to research from the New York Fed. And delinquencies on that debt are growing: Nearly 2% of the debt held by 18- to 29-year-olds is transitioning into serious delinquency — meaning the payment is over 90 days past due — the highest among any age group.

Feldman said she's taking control of her debt and has publicly documented her journey of paying down the bill — which now sits at $10,000. But the ability to chip away at a big debt load won't be as easy for some, especially younger people who are likely forking over more for rent, student loans, and basic goods. 

The strange pandemic-savings paradox

The pandemic recession did not actually mean people had no money. In fact, the personal savings rate soared to 33% in April 2020, well above the long-term average of 8.9%. Thanks to government stimulus and the lack of spending options, Americans socked away $2.3 trillion in savings from around the first quarter of 2020 through the third quarter of 2021, according to an analysis from the Federal Reserve — "above and beyond what they would have saved if income and spending components had grown at recent, pre-pandemic trends."

I think I've just lived a more intentional life all around, and it forced me to think about where I put my dollars in new ways

While some people ran out to spend all of this extra cash, others who were able to work from home, pay down debt, keep their costs low, and let the stimulus checks roll in found that a stronger savings account suited them. Take Julie Gurner, a Gen X executive performance coach and the founder of the Ultra Successful newsletter. In February 2020, she and her spouse were working with a real-estate agent to purchase a property in New York City. They had what she called a "very healthy savings rate," but would splurge on things like going out for dinner or to the Philharmonic. When the pandemic hit, Gurner said her approach toward money shifted.

"Before, I wasn't paying attention as much to how I spent on certain things," she said. "And now I think I've just lived a more intentional life all around, and it forced me to think about where I put my dollars in new ways."

Instead of putting that down payment toward a property in New York, Gurner and her spouse bought a farm in Pennsylvania last year. Her money now goes toward things like improvements for the farm, rather than DoorDash or a show.

"I feel like life is precious, and resources are very precious, and I think I took that for granted," she said.

Like Gurner, some of Rattle's clients began to have a greater awareness of their own spending behavior — a time of precarity meant more clarity about financial lives. For super savers, Rattle explained that "money is security, money is survival. So when a bad pandemic comes along, saving more is good because it equates to survival. And survival is important."

But being a super saver was a position of privilege, since the people who were most able to decrease their spending were also probably at the top of the K in the K-shaped recovery, seeing their income and jobs prospects increase, while the opposite happened to lower earners. The Fed found that the top quartile of earners added nearly $1.5 trillion to their savings through spending reductions, even as the pandemic consumed millennials and Gen Z's savings. And this lucky cohort likely developed a lifelong inclination for financial safety, Rattle said.

'I got a glimpse of what it was like to receive money'

The pandemic was wholeheartedly a very bad thing, but the period of upheaval it caused also brought stability, happiness, and, ironically, better health for some. Programs like enhanced unemployment-insurance benefits meant previously insecure Americans could start fulfilling financial dreams or just have a little bit of stability. Americans receiving those benefits said the shift had radically changed their vision of work and what they should get out of it.   

"We have quite a lot of workers who find themselves economically stronger now than they were before the COVID-19 recession," Lucie Kalousova, an assistant professor of medicine, health and society, and sociology at Vanderbilt University who studies the impact of recessions on health, told me.

Marla Mae Harvey, 31, was laid off from her job of five years about three weeks into the pandemic. Her now husband was also let go. At first, navigating the labyrinth of unemployment was stressful. But once they figured out the logistics, things changed. Harvey was making more than she had been in her old role in food science, and she felt like she "could breathe for a little bit." 

"I was able to go to the grocery store and make all the food I wanted, because I didn't have to worry about grocery prices," she said. "That was probably the first time in my whole adult life that I actually felt financially secure." 

Harvey and her husband were able to start saving, which allowed them to put a down payment on a car and go to the courthouse and get married. Harvey started her own baking business (she used her new earnings to pay for the certifications), and she was able to hone her pastry skills so much that she ended up making it on to a Food Network competition show — and winning.

"The world around us was crumbling, but at the same time, there were some good pockets," she said. "Because of the pandemic, I was able to work on myself, work on what I wanted to do in the future."

When people lose their jobs during a recession but don't experience the negative effects of financial insecurity, they "find themselves in a situation where they have more time for things that we normally consider more healthy," Kalousova said. They exercise more, sleep more, cook more, and spend more time with their families. During recessions, research finds, mortality rates drop and physical health improves. And while the COVID-19 pandemic was obviously devastatingly deadly, research has found that without the "recession effect," there would have been almost 40,000 more deaths from March 2020 to February 2021.

For people like Harvey, the lasting psychological impact of the pandemic is knowing that the government and society can grant her financial stability, happiness, and better living conditions with the passage of a bill. That's a genie that won't go back into the bottle: look no further than the renewed interest in organized labor and the skyrocketing number of workers who've walked out of jobs because they're fed up with poor conditions.

A new generation

Every recession teaches different lessons. The Great Depression, for instance, "made everybody very insecure about the state of the economic system," Kalousova told me. The stagflationary period of the 1970s ingrained the expectation of rising prices for a generation, while the Great Financial Crisis made Americans deeply distrustful of the banking system. The pandemic was different because it came with the added stress of over a million deaths in the US, but it also did not include the usual self-blame that comes with a purely economic downturn, Kalousova said.

"It was just something that happened to all of us at the same time, and we didn't feel like we had contributed to it, really," she said, adding that the universality of the pandemic era allowed us to learn "collective lessons" as a society.

In the last few decades, we've gone through a lot of recessions," Kalousova said. "They have become part of a normal experience.

But what really matters when it comes to the economic and physical repercussions of a recession is when in your life you experience it, Kalousova said, adding that even collective lessons carry personal repercussions. For super savers who are later in their financial lives, like Gurner, the pandemic was a chance to undergo a period of self-examination and comfortable financial growth that set them on a road for future stability.

But young people and those in the middle of large shifts in how and why they spend money are more likely to see a downstream effect on their personal financial habits. Early-career workers are one of the groups most vulnerable to the economic impacts of recession, Kalousova said, along with people on the precipice of retiring who need to tap their 401(k)s.

As Rattle told me, every person reacts differently to big catastrophes. For the super savers, that reaction is likely going to be by continuing to grow their nest eggs. But for those who can't save or who sought solace in being able to buy things, the economic picture isn't so rosy.

"They're going to become my client when they're about 50 and they realize they have no savings, and they're actually still alive and they want to retire," Rattle joked.

Some of the long-term effects are out of consumers' hands, especially as prices remain high and employers use layoffs to bring down labor costs. If the mantra of the pandemic recession was giving everyday Americans money, the reaction is now to yank that back. And many young people are simply girding themselves for the next disaster — whether it's a recession or a prolonged period of high inflation. If there's one thing Generation Precarious has gotten used to, it's a state of chaos.

"In the last few decades, we've gone through a lot of recessions," Kalousova said. "They have become part of a normal experience."

For people like Marla Mae Harvey, the baker who experienced financial stability for the first time during the pandemic, the return to this uncertain future is a tough pill to swallow. After all, the government was able to pump up their savings accounts and keep them safe and healthy with the flick of a pen. But it's becoming clear that during the next crisis, she'll be on her own.

"It definitely made me kind of hate capitalism," Harvey said, "only because I got a glimpse of what it was like to receive money just for being alive and being able to survive — and it was really nice."

Juliana Kaplan is a senior labor and inequality reporter on Insider's economy team.