Recently, I came across an article that stated the Baby Boomers (those born after World War II until the early ’60’s) were born at a fortunate time in economic history. The United States was going through one of its most prosperous times with jobs plentiful and salaries ever increasing. Baby boomers not only were more educated than their ancestors,  but they had disposable income to spend on luxury items. This time period gave birth to what we know as the great “American Dream”: one house, two cars in the driveway, extra income, and enough of a work force to fund the fairly new Social Security retirement fund. Times were grand.

*Side note: There was a civil rights movement going on during this time, so not everyone will agree that the boomer generation was a prosperous time. 

On the flip side, the baby boomers’ children, mostly born in the 1970’s and ’80’s, were born at a time of decreasing prosperity riddled with recessions every 5 or so years. These are the Gen X and Gen Y members of society that were hit hard by recent recessions. With limited amounts of time to make up for dips in the economy, if these folks didn’t time purchases and investments just right, they lost big on the back end (housing bust and stock market crash).

Okay, so maybe I’m sounding a bit “woe is me” right now, but let’s take a look at some recessions over the years:

– Prior to 1970, there were a handful of recessions during the great prosperous period, but none of them lasted for more than a year. The GDP (gross domestic product) during these short recessions dropped between less than one percent to almost four percent and unemployment stayed below eight percent.

– The recession of 1973 lasted longer than a year, the GDP dropped 3.2% and unemployment hit 9%. Gen Xer’s were either in diapers, or not born yet.

– 1980 – 1982, two back-to-back recessions that were caused by adjusting for the inflation of the 1970’s and the Iranian Revolution affecting the oil supply. Though the GDP didn’t dip much (less than 3% for each recession), unemployment zoomed up to 10% and these two recessions combined lasted two years. The Gen Yer’s were in diapers while Gen Xer’s were in primary school.

– In the 1990’s there was a short and mild recession, though some states were hit harder by the decrease in the aerospace industry. Over all, the recession lasted a few short months and unemployment stayed below 8%. Gen X was graduating high school (or getting close) and entering college. Gen Y was in primary school.

– 2001: Dot.Com Bust and 9/11. Technically, there were 10-full years of recovery without a recession between 1991 and 2001. If the Gen Xer’s timed purchases and investments correctly, they weren’t affected by the technology bust. However, for some of us that were just getting in on the tech wave, our timing was awful! On paper, this recession looks mild, but if you lived an area where the tech bubble was bursting, it wasn’t so great.  Gen X was turning 30 (or close to it) and the Gen Y population was around 20.

– The Great Recession, 2007. By far the worst recession since the Great Depression, the GDP dipped 4.3% and unemployment increased to 10%. Though the recession ended in 2009, many people felt the repercussions many years later (and still do). Only this past year did unemployment fall below 8%. Gen Xer’s were 30-40 and many lost their homes, while Gen Y may have had difficulty securing employment during such high unemployment rates.

Of course, no one recession can make or break someone’s finances. For Gen X and Gen Y, we technically still have some time to make up for the losses. However, Gen X is running about a decade behind depending on how hard hit they were during the Dot.Com bust and the housing bust. Not that the boomers went unscathed. Those that cashed out home equity or lost a job were just as disadvantaged. Yet, they had many previous decades of built up wealth to cushion the blow (hopefully).

The bottom line from all this is: make smart decisions. Sure, we can’t all time investments right (no one has an accurate crystal ball), but we can make our own personal finance a bit more recession-proof. Stash away cash, invest for the future, and don’t get too caught up in current trends (everyone’s doing it, so I’m gonna do it too!).

Were you affected by any of these recessions? As a Gen X or Gen Y adult, do you feel short-changed, or fortunate? As a boomer, do you feel lucky?

13 Comments

  1. I don’t feel shortchanged. I think the Boomers were super lucky especially with real estates. The housing price in CA were so affordable in the 60s and 70s. It’s so much harder now for a young family starting out there.
    Overall I feel very lucky though. It’s still much better to be born in the USA than most other countries.

    • @Mid Life Finance – They definitely lucked out with real estate. When my parents bought a house in my area in the late ’70’s, they paid $60K. My stepfather was a fireman and my mom was a stay-at-home mom. They easily afforded their house and had it paid off in 15-years when they sold it for almost $200K. Now that same house is estimated at $480K. But you’re right, in other states the difference isn’t as noticeable.

  2. Money Beagle Reply

    You can also add the fact that most Boomer’s got full health care for most or all of their careers, and many now collect pensions. Nobody gets full health care anymore and you’d be hard pressed to find many Gen X or Y’ers who have a meaningful pension. Times have definitely changed, and as someone born in 1974 I do wistfully shake my head at the changes, but you can’t really do a whole lot except make the best of your situation, and that’s exactly what we try to do!

    • @Money Beagle – That’s true. However, some professions, like teachers and public workers still receive full health benefits and pensions (I’m fortunate that I’m a teacher, though my salary isn’t spectacular). But making the best of the current situation is all we can do.

  3. Tushar @ Everything Finance Reply

    I think the dot come bust hurt the people who worked in the industry the most. My parents definitely had a much easier time in their careers, housing, and many other aspects than I ever will, but I don’t feel short changed. I just recognize that I have to work a bit harder, and that’s okay!

    • @Tushar – I think that’s all we can do, work harder to achieve our goals. If anything, we might need to modify or change what we think is our ultimate goal and instill work ethics into the younger generations.

  4. krantcents Reply

    As a boomer, I do not feel particularly lucky. I was responsible for my success and failure. Did I have any special benefits along the way? Perhaps, but it was offset by lower wages for some of my early years. There are a variety of good and bad times in every lifetime. As a boomer, I experience age bias and that is no fun either.

    • @Krantcents – Age bias is an unfortunate result of getting older. At least some professions, like teaching, admire older teachers (as long as they haven’t burned out! 🙂 ) I think the Boomers also have amazing memories of how things have changed from the ’50’s to the present. (Of course, things have changed greatly from the ’70’s to now, but from a nostalgic pov I think I missed out on the ’60’s!) Gen X may also have been a bit spoiled as children since boomers were able to afford luxuries that they may not have had as kids. Maybe that’s why I’m complaining. I’m spoiled! 😉

  5. SuburbanFinance Reply

    It’s crazy how easily my parents got great jobs. They didn’t need an education, they didn’t need tons of experience, they just landed in these jobs that are so coveted now. I have a great job too, but I had to work substantially harder than my parents had to in decades in just a few years to get there. But I don’t resent my circumstances. I have it good.

  6. Crystal @ Prairie Ecothrifter Reply

    I’m a Generation Y and haven’t been too badly affected. We bought our first home in 2007 and got a great deal on a foreclosure. We bought our second home in 2012 and are actually hoping to devaluate so our property taxes will decrease. Our other investments took a big hit in 2007-2009, but we invested more and are up even more than we were ever down. Overall, I think our generation has a multitude of opportunities thanks to the depressions if they’d recession-ready with cash on hand for investments when they are at huge discounts.

  7. As a Gen X person, I do think that the prior generation – Boomers – had it easier overall. Sure, the quality of life has improved due to advances in health care, technology, etc. But still, it absolutely seems that there is more financial pressure for people these days. As a parent, I hope the trend doesn’t continue in this direction with the next generation. We don’t have a crystal ball, so I’m at least hopeful!

  8. “Recessions come and recessions go.
    What are you going to do about it, that’s what I’d like to know.”

    I’m paraphrasing Baby Boomer Paul Simon there, but the point is that stuff happens to everyone – it’s what we do about that matters. No generation has a smooth ride. Boomers had social unrest and their parents had world war.

    I’m a Gen X-er (born in 1974) . I first entered the workforce (part-time in H.S.) just as the recession hit in the early 90’s. I graduated college in 1997 and went to work for a .com startup just before that bubble burst.

    Some may think I should have a lot to complain about, but I don’t.

    I’ve learned that if you sit back and let circumstances take you, then you may not like where you end up. But if you make smart decisions along the way, then most external circumstances can be overcome.

    BTW: Gen X-ers who started saving for retirement in the .com days were better off than boomers, because we only had a few hundred or thousand dollars invested when the bubble burst. Boomers had much more to lose and less time to make it back.

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