Monday, March 14, 2011

3 Negative Impacts of High Gas Prices on Echo Boomers

As gasoline prices began to rise, some economists fret about how high gas prices may encumber a strong recovery. However, high gas prices also threaten the financial stability of Echo Boomers in three different ways.

1. The Millennial financial data show that over half of U.S. Echo Boomers have no assets, such as emergency savings. In other words, over half of Echo Boomers live paycheck to paycheck. With higher gas prices, Echo Boomers will seek other ways to adjust their expenses or borrow more money.

2. I speak with Echo Boomers on a regular basis who commute long distances to school. If gas prices continue to stay high, or rise further, this may mean that some Echo Boomers will either need to move closer to school, find another university closer, or stop school altogether. The same reasoning applies to Echo Boomers who commute long distances to work.

3. Expect high gas prices to encumber many Echo Boomers from saving money for retirement or a future home downpayment. If gas prices continue to stay high, Echo Boomers will further delay any consideration to buy a home. Also, the 2% tax deduction from social security will most likely be wasted on higher gas prices, and not saved or spent stimulating the economy in other ways.

Essentially, I don't expect to see the financial and economic outlook for Echo Boomers to improve as long as we see high gasoline prices.