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The Zillennial exception: Amid downturn fears, many in cohort live rent-free, splurge on luxuries

With limited housing costs and utility bills, many in the microdemographic sandwiched between Millennials and Generation Z now have "disproportionate amounts of money to spend on goods and experiences," reports

Published: January 22, 2023 2:09pm

Updated: January 22, 2023 11:24pm

At a time when millions of Americans are struggling to pay bills amid high inflation, declining real wages and recession fears, many members of one relatively unencumbered microdemographic are taking advantage of their uniquely low living expenses to treat themselves to an array of luxury merchandise and services.

A new report by Doxo finds that 86% of U.S. consumers are very worried about "the state of their financial health heading into 2023," with 73% of consumers saying "they are most concerned about paying their Utilities, followed by Auto Insurance and Cable & Internet (both 63%), then Mobile Phone (62%)." 

Even as most consumers think about tightening their belts amid rising economic anxiety, however, "Zillennials" are standing out for their freespending ways.

Born between 1990 and 2000, the Zillennials are sandwiched between Millennials and Generation Z — the in-between status that inspired the cohort's portmanteau name. With "steady income" and "limited expenses," the microdemographic is fast "becoming a retail spending force and favorite," according to a new report by PYMNTS, a news and data site for the online payments industry.

Making up close to 10% of the U.S. population, these "true digital natives have never known a world without the internet and mobile phone," according to the report. Constantly clicking, swiping, and scrolling, many of these individuals "still live with parents and siblings," meaning they "don't usually pay for rent or utilities." Insulated in the extreme,  Zillennials "don't even yet pay for their own mobile phone service."

With limited housing costs and utility bills, Zillennials now have "disproportionate amounts of money to spend on goods and experiences," according to PYMNTS. As more members of this demo generate income, remain under their parents' roofs, and avoid "rent, mortgages and utility payments," Zillennials will likely spend more of their disposable income on merchandise and entertainment, the report forecasts. And some recent data on spending habits hints that they may have a taste for the finer things

Young consumers, many of whom fall into the Zillennial category, are fueling the luxury boom, Business Insider reported in December. Citing research from analysts at Morgan Stanley, the outlet noted that there was a particularly strong demand for products made by Burberry, the iconic British fashion house that continues to see its profits grow, and LVMH Moët Hennessy Louis Vuitton, commonly known as LVMH, a French multinational and owner of brands synonymous with luxury, including Dior, Tiffany, Moët Hennessy, and Louis Vuitton. Stylish shoes, designer handbags, and magnificent watches are just three of the goods in high demand. 

In 2022, the global luxury goods sector achieved sales revenues of $1.5 trillion, a 21% rise from the previous year, and 2023 is expected to be even better than 2022. However, this spending craze could come to a screeching halt if, as some economic experts predict, the U.S. is hit by a  recession this year. 

Others, however, consider the luxury market to be "recession proof." A recent report by Bain & Company suggests that the luxury goods and experiences industry (think glamping and hybrid wellness retreats) should expect to see further expansion "for the rest of the decade to 2030, even in the face of economic turbulence." 

Zillennials will presumably continue to do their part to fuel that expansion — unless, that is, their parents start charging them rent.

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