(Bloomberg News) The day Michael Anselmo signed a lease on his first apartment in New York City, he lost his job at Buck Consultants LLC. He spent about 10 months struggling to pay rent with unemployment benefits. Two years later he's still hesitant to buy a home or even a road bike.
"Every decision that I have made since I lost my job has been colored by that insecurity I feel about the future," said Anselmo, 28, who now rents an apartment in Austin, Texas, and works as a consultant for UnitedHealth Group Inc. "Buying a house is just further out on the timeline for me than it used to be."
Anselmo and many of his peers are wary about making large purchases after entering adulthood in the deepest recession and weakest recovery since World War II. Confronting a jobless rate above 8 percent since 2009 and student-loan debt hitting about $1 trillion, 20-to-34-year-olds are renting apartments, cars and even clothing to save money and stay flexible.
As the Great Depression shaped the attitudes of a generation from 1929 until the early years of World War II, so have the financial crisis and its aftermath affected the outlook of young consumers like Anselmo, said Cliff Zukin, a professor of public policy and political science at the Edward J. Bloustein School of Planning and Public Policy at Rutgers, the state university of New Jersey.
"This is a generation that is scared of commitment, wants to be light on their feet and needs to adjust to whatever happens," said Zukin, who's researched the effects of the recession on recent college graduates. "What once was seen as a solid investment, like a house or a car, is now seen as a ball and chain with a lot of risk to it."
One key difference is that technology now allows companies to provide younger consumers access to what they want, when they want it and at a reduced cost, said Paco Underhill, founder of New York-based consumer-behavior research and consulting firm Envirosell.
"Renting is something that is in play that wasn't in play during the Great Depression," he said. "To a modern generation, ownership isn't about having it forever, it is about having it when you need to have it," said Underhill, who has studied shopper behavior.
Enterprise Holdings Inc. and Hertz Global Holdings Inc. are expanding in what the Santa Monica, California-based research firm IBISWorld estimates to be the $1.8 billion hourly car-rental business, a segment dominated by younger drivers and made popular by Zipcar Inc. Startups such as Rent the Runway Inc. are supplying high-fashion apparel to satisfy those who want to wear, not own. CORT, a unit of Warren Buffett's Berkshire Hathaway Inc., is increasing its furniture-rental marketing efforts to college students and fledgling households, said Mark Koepsell, CORT's senior vice president.
"Renting makes a lot of sense," said David Blanchflower, professor of economics at Dartmouth College in New Hampshire and a Bloomberg Television contributing editor. "They have no money and they are not buying fridges and they are not buying the things they normally buy when they set up homes. Their incomes are a lot lower."