This is exchanges of Goldman Sachs, where people from our firm shudder incites developments, curly shaping markets, industries in the global economy, objects, Ewart, global ahead of corporate commute, entered the firm. How does when we are born? In fact, how we spend or save we're here Today to understand the answer that question: by discussing three successive generations generation ex more, the US and the youngest, the bunch generation Z, I'm joined by Hugo Scott Gal? I fellow exercise and the young Lindsey dropped. Her man and Christopher Wolf of Goldman Sachs Research, Hugo Wendy Chris welcome to the programme I have to be here soon. Things off. Let's talk about why you view recent research as important to go Audrey

won t you, since you led the firms, thematic research team are generally, shall differences real. Why do we pay attention to them? And what can this research tell us thereupon, because They can help you understand how and why consumption differ. The most age group is very important. Another taxes between one thousand nine hundred and sixty five and one thousand nine hundred and eighteen, you healthy, pointed Andre night, Sir. Are not conceiving in the same way as the baby boomers who were born between forty six. Sixty four did so generally again and who come the man you're not gonna, consume the same. the millennial. So you can understand what shapes each of these generations attitudes a brief than you can understand unlikely consumption by I have even more broadly as a question or on what sort of leaders they will be when the time comes know the difference between a cautious axa, perhaps more carefree boomer is important when you think him out seo

the strategies, but the bottom line here. Is that honest? I generations helps a lot when it comes to the level emesa consumption, because what a twenty five year old, say that he has got thought was the most important thing in the world. Only sports cars not want to twenty five Earl. Today, things are the most important of all men on me a thing it could actually be an experience. So this I see a lot of attention, millennials more get there, but Chris you said it's just as important to understand: generation, Z, Genji, those born after ninety nine as it is, to understand millennials. Why is that one of the key things investors, businesses need to know about this generation and its habit, agenda are born in two thousand and five in the: U s has been raised under a vastly different set of circumstances and experiences in a millennium that was born in nineteen? Eighty five for starters, Genji is and more diverse, their America's most diverse generation. To date, the Census Bureau tells us that by the year twenty twenty more than half of kids in the

ass will belong to a minority race or ethnic groups. So diversity in the traditional sense of the word is becoming the norm and it's happening with Genji and at the same time, Genji also holds a more positive view of rising ethnic diversity in America than generations before them did, and we know that Genji is also more financially conservative. There more debt averse there more focus on financial outcomes and then, lastly, think any time you're talking about America's youngest generation, you have to be thinking about their use of technology and This is a generation that was born device in hand and that will live in a digitally connected. Wi Fi enabled world from the also the grave. They know nothing else and that's how they learn. they spend money or how the influence others to spend money currently most likely their parents how they interact

socializing, ultimately influence and inspire each other as Oliver reflection of that, and so today, with Genji we're talking, got a cohort of more than seventy million people that we know very little about, and I think the laziest assumption that you can make is that they're. Just young millennials Lindsey, there's, no dispute that everyone can attach millennials and has been for at least a little while what big ways you see them exercising their influence over the landscape, and how do you see? Companies now responded to that to start with theirs the sheer size of the demographic, you ve got over ninety million consumers strong and entering their peak spending years, but also entering in stage in their lives in the workforce, and so we see them having important influence on companies from the inside of key talent. But also from the outside, as consumers, voting with their dollars beyond their hast. There's this element of souls

change that. We see characteristic of millennials where there are simply getting married later and starting to have families later taking the outbreak. to live in their twenties and really invest in themselves travel in fort communities. None of this is necessary shocking people have in getting Mary later for her of years now, but nonetheless, The dynamic that really does create a group of consumers that has a lot more time to think about and to indulge themselves as individuals before transitioning family units. Lastly, the most exciting part of the story miss clearly this very rapid and transformational. Technological change were talking about the obvious, the internet, mobile phones, social media and it's this technological, component that truly like a fire under the story and out of which we see a whole host of really exciting behaviors emerge and I'll. Give you a few examples of those behaviors for small generation of reach.

Archers millennials are not required to taking that face value. The way that older generation may have had to, because with the internet, the barriers to access information have been absolutely up: and so one of the ways that we see that manifest is gravitating towards brands that are truly authentic, gravitating towards products where there are real queer story of origin, whether its craft, beer or artisanal honey We see for millennials the ability to access. What's behind the curtain hearing, what is this really about as something that's pretty important? Another behaviour, ratings and reviews it used to be true years ago. That advertisers would focus on the expert opinion Don Quixote hearts absolutely the doktor telling you what kind of toothpaste you should you or the testimony all which we know wasn't really inauthentic testimonial was hand picked up a consumer who is saying exactly what

the brand wanted you to hear about the specific virtues of their product. Now we see consumers really August on the ratings and opinions of absolute strangers, who may not have any authority in a product whatsoever. One last thing I noticed of behaviour, is that, while in today's Dan Age, everybody all generations are spending a lot of time. Online millennials are a whole lot more focused on giving their opinion online. They spent a whole lot more time. Posting this man a whole lot more. I'm uploading videos making reviews themselves. You have a very vocal in opinionated group of consumers to answer your question on companies responses today we see

a whole hearted, embrace that this millennium consumer is exhibiting different, behaviors and big capital investment to try to get out in front of where they think these consumers are growing next. So, to give you a few examples, we see massive investments in organic food at grocers, traditional grocers places like Walmart, where not just organic food, but organic food. That fits the criteria having a really accessible price point? We see significant investments in Army channel and online. We see big consumer companies making large acquisition so, as you think about the combination of a consumer pool where the millennial is taking consumption, but also the big push behind corporations investing in it. Those are two important catalyst for what we think is going to be pretty profound change. So work our way up the age ladder as it were, Hugo. Why generics are they still matter? We don't hear much about the many more of a millennials buzz

Genji Buzz, but you said They are just as important as this point. Why is that? What their import. because the average age of annex is someone I'm it forces which is pretty close to the sweet. Spot of consumption lies where people spend the most agenda. Has always been a forgotten generation and never had a lotta lacks yeah, while they were named off the millennials. That tells you how enormously unimportant were, which is unfortunate. and they are sitting in the sweet spot of consumption. They are not a big focus for the advertising industry, but they make up somewhere between twenty five to thirty percent of consumption. The- U S and is pretty clear that they don't ask com consumed on the boom is remember, and so, if you're, a company who has a meaningful potential revenue coming from setting to people in the sort of Age Burma sites of thirty five to fifty five Edith No, but not only all the few agenda, because there was quite a big falling birth rates in the sixtys, but they also have less to spend. You said the group is,

somewhat scarred for many due to big crises, the financial crisis of two thousand, seventy thousand aid and the dotcom bubble first in the early two thousands how's that affected their spending- the ratio answer is its impact in them. A lot axes are on the same for their asylum, so after trying spend less, they have to say more when they do so, I very concerned and value for money, and they are less hung up in some states. Are symbols of the booms parasites, so they spend less on cars and abandons did our endless estimate. They spend around three percent of their income and cause worsen. The Burma's viper that's more like it here. Low cost, a low risk mutual funds for us, then the older generation than they have been. They ve been unlucky. Erasmus to Hoddan they ve been unlucky with acid price cycles, some are more likely to have did that terrorism they actually market for the first time in the light and he ninety as we all know what happened that look out so that in work, and so also look that that was bad luck. Number one Babylon number two: is this the mid two thousands

Finally, we need to buy a family well alone. Devalue ratio is higher than the previous generations, but we need to do resulting family, so we all know what happened next, circa Garden, seven eight that Ngos while so their hit a net wealth was greater than anything. The boom is assigned generation, experienced reforms, or they are undoubtedly scarred, I think, rationally so, bodies to big drawdown and acid bodies another whether here, as is that from age, thirty to forty seven access. What thirty to forty among boom is what those forty, the ESA ninety five under went up nearly four times for the boom is burning teutons for generics set. You assume retirement as hasty values which may well be optimistic these days accidentally have twenty had left to make up the shortfall. That does not bode well for how much they can come and grow their share of consumption, particularly at a time when, Mozart, slowing down their assets and putting a low downward pressure markets, but millennia, and Jan Zaire's also lived through these crisis, but a different points in their lives. Are we seeing

was generations become more financially conservative Chris, I do think that we are seeing signs that Genji is more financially conservative, then generations before them, and probably most notably them Lenny else. We know that amongst Jens Ease, top concerns are the rising cost of college in being saddled with too much student loan debt. This is generation that wants to achieve financial independence, while avoiding many of the pitfalls that may have hindered generations before them. I also think it important to recognise, is that an individual's use and attitudes towards money and finances are not only, sheep by their own experiences and their own lifetime, but, like anything else and life, parents will pass down their perspectives to their kids. And so you have to keep in mind that gender by and large is being raised by Jan acts and Hugo was,

is talking about how genetics has endured two very tough economic slowdown, during some of their prime earning years, and I add to his comments and other staff, which is the fact that today, there are still more Jan answers. Underwater and mortgage than any other generation on top of that Genji is so acutely aware of some of the financial struggles that many millennials have faced. So in that context, the notion that Genji, despite their relative. Lack of income today or lack of experience with managing finances. The fact that their showing some early indications of skewing more conservative, financially is actually not very surprising to me and one of the best stats that I came across in all my research that I think sort of sums it up was that sixty

son of Genji, but we use a lot of money to be evidence of success and success, sort of being loosely defined, intentionally open, ended phrase there, and that compares to just forty four percent of millennials when they were the same age it shows that this is a generation. That's just laser focused on the financial consequences of their decisions and setting themselves up for financial independence. I think we can come. If we say that millennials learn some good lessons from the financial crisis as we see them now in the early stages of their adulthood may smarter decision is being more concern. With their own balance sheets, less inclined to take on that less inclined to use credit cards as it relates to some sort of Ticket purchases, it's not that millennials want to stay at home forever, but their smart about taking the opportunity to say and then finally, when they have enough of a nest, I built going ahead.

and buying home, but in the meantime, there spending money on experiences and to that generation ahead of them are the generations that sometimes looks frivolous. You know they're not investing in whether it makes sense or not a car, a home, their spending money on a lot of things that older generations would considers or watchers sure absolutely, and I think that that speaks to this idea of taking your twenty two really investing yourself, but as you kind of stack up what your personal piano looks like post, a home and post a car first you decided to take a trip and experience, and you know, rent in an apartment on air being b and travelled in a way that was more affordable. You just don't have this economic effect. So absolutely see where areas were millennials are willing to spend, but overall There are not levering themselves up to make their dollars go further. there being much smarter, much more conservative about their balance sheets

We'll say there is one area where we see from a consumption perspective. Important change, which is, I dont, have as much money to spend on myself, I'm not thinking about being extravagant on what I'm spending, but I'm gonna make dollars, work harder for me, and so as it relates to read Now this idea of show rooming or applying different apps or different websites to help you find the absolute lowest price, then you can buy something for or being patient waiting for something to go on cell before you actually knew by it. Other things that we see ultimately, in pre deflationary for some important categories who say does anything ever salad, retail price anymore, there's fewer and fewer things that are selling it full retail price. I covered the retail softly apparel stocks in a huge, and from all based retailers, and many other retailers is that the consumer is conditioned and smarter about c and waiting for that right kind of a deal. What's up

but more better education, historically higher levels of education meant increasing earning potential for people over the course of their careers lately see intuition cos skyrocket and wages be more or less stagnant got you wrote about the trade offs there? How? is that changing equation affecting the way people think about investing in education. If you didn't decompose, you're CPR, U S inflation over the last fifteen years. Location stands out of the one course that has gone up, every day of every week of every month of every year, rule CPR inflation is up one point four times and I paid, whereas it opens up to three times over the massive increase in costs. So if you annex, I you're spending more and your children from education point of view. Paul Because

you don't know him in the way that maybe you felt your parents did that actually axes are being much more active parents investing heavily in children and, secondly, they are facing an inflationary price effect, which means they have no choice but to pay more. So I think one of the things that is beginning to happen is that, on the basis that that which cannot continue with the rising cost of college relative to wages means something at some point will have to change. now is that the few people go to college, or is it actually how you consume education changes all we gonna see innovations around distributing content more broadly using the fact that ever has access to technology so that the fight and distribute more broadly main sake. Are you going to see I had any sort of cell. I content online outside of the university system, all going to see greater penetration of the monks. The massive online learning courses phrase have been around for a while. A lot of universities have innovate in space, but has taken off as a substitute for traditional college in traditional forms of learning so far

and because I guess there are two things that play a one is that you could argue that the signal from education system right now is at least the least bad, that it is telling employers something pretty clear that this person has been to this college and brush wages. That is a helpful system from boys interpret, and secondly, as rarely been, I would argue yet an alternative to that. You are seeing certainly some of the Tec. Come developing their own ways of assessing talent and skill that they are not Sorry, relying on the tertiary education signal so they all, maybe thinking how do we do our own skills base testing and then? Secondly, at some point, I think the education bundle probably does change even consume parts of it without necessarily having to go to college Wally's go to college for long, and so it seems that if you have something which is so important which clearly education and skills and acquisition of them that is causing increasing amounts rose, hits the return that there will be changes. The pay change will be when employees say you know what we will use a different way of assessing,

timescale and that's where maybe the education overall education sector feels on disruption. Millennials are also an important milestone. Their becoming parents Lindsey Use than latin research, what you called millennial moms? How are Our spending habits changing after they have kids and what we summon most interesting things. He found as you looked at these new moms The thing that we notice is that, in terms of parenting and decision making not surprising if consumers are relying on their social communities and these new tools that have developed to help them be better parents but also we see them trying to spend their dollars smarter as we talk about before, but not that are not willing to pay premiums for things that are important to them, and we see this in things like organic foods and organic, unnatural cleaning supplies and longer detergents were seen, goes as important area

where their strong growth I'll. Give you another example when my favorite example that I think about millennial moms is what happened in package baby food package, baby foods out over the last five years or so have come under extreme pressure down an excess of thirty percent. We seen a lot of challenges with per capita consumption among consumers for packaged baby food now think about power that product they survive for years in your young years generation after generation is transforming dramatic, an absolutely end, as you think about why packaged food has been an important component of consumption. It's a convenience brings right your mom and you trying to say your family and rely on package food as opposed to fresh food, which takes longer to prepare inward, to deliver that requirements. Your family. There are If you other moments were a woman is as stressed or pressed for time as when she's got a screaming infant who want food, and so, if you think about how Chris

call your package baby food it in delivering those things to the mom is very important. However. She now today desires to make her own baby food because she can see the transparency knows exactly where it comes from All four going all of those benefits of convenience that the package baby food gives her, because, if that important to her, the transparency and purity of the food that is giving her child is that much more important to her that she is actually, as we think, about the development of consumption and and the shift towards packaged taking a couple steps back from where consumers have been going for many many decades we talked throughout. This conversation that technology and how it plays a different role for these three groups, millennials and judge years, or call the digital NATO's. Are we seeing The adoption of a lot of the new trends in buying sharing affect older generations. Today, absolutely, I think,

to me. One of the most exciting aspects of this millennium story- and it is true for agendas well that is their ability to influence up the age curve and on this idea- that millennials or younger consumers, whether in their homes, with their parents or in the workforce with their older colleagues, are the curators of technology and the curators at a mentor, soon behaviour absolutely little, but a reverse mentoring there and I'll tell you something: apples where we see this in retail, for example, we know that young consumers, specifically you're twenty five to thirty four year olds, are very active online. Their shopping online, more verses within retail, theirs shopping online at increasing rates every single year. We see that your thirty five to forty four old are about a year or two behind where they were anger. Forty five to fifty four year old are you're too, behind where they were, and every single year you see this young generation moving.

further and further up the adoption curve and pulling all of these older generations up with it. So I think that their influence across older generations has been really important. Part. A story I feel at the generational divides deeper than I would have gas, but are they really are? The generation divides more pronounced today than they twenty years ago, Hugo and how much they looked twenty years from now. What I think we're in a pair of quite fast technological change, certainly as far as individuals, access to technology is concerned. So that means adoption is fast and therefore differences between generations. I would argue- maybe a quite wider them I taught by the axes that kind of analogue digital hybrids, while the millennials are probably more different taxes. The maybe axes word boomers, but I wonder- and this is very big pitch of thought- is that as yet more transparency as everything is preserved into posterity into eternity, including this

cost rashly subsequent generations will know a lot more about their predecessors who am before them. So if all great great, her grandchildren will listening to this? They will, male to hear what we thought at the time. Probably this really much oyster but I have a levelling effect in some way that IRAN will know a lot more about each other and therefore you getting spurts of technological change or adoption can be faster. My younger people, history tells us that young people, usually adults and adapt to new technologies, foster but eventually there's gonna catch up, so you better lindsays point around each pseudo age group is getting faster, catching up the fastest growing, social media penetration. Generous, is actually the old apologetic. Oxen generous, probably have the same social media penetration right overruled was millennials at five years ago. So you have these spurts, but I think the catch of and the differences also enable get more small and much narrower. I agree and sunset, I think a lot of this comes from Jan acts. I mean,

there is sixty is the new forty today right, you have an older generation that doesn't want to be old and out of the game, and so there is much more of a willingness to adapt. and stay relevant and as a result, more seeing older generations and younger generations closer together in many ways and in the past. I also think, generally differences are somewhat self reinforcing. So MILAN, we'll have a different parenting south in general and boomers dead, and when on common genji will have a different parenting style from millennials, so we spoke to this a bit how Jan Access influencing Genji and, think that will continue as generations of all. Thank you very much and give my. That concludes this episode of exchange. In fact, thanks to lessen the spot gas, was recorded on October forth.

two thousand. Sixteen all price references and market forecasts correspond to the date of this recording. This podcast should not be copied distributed, published or reproduced in whole or in part. The information contained in this package does not constitute research or recommendation from any Goldman Sachs Entity to them

neither Goldman Sachs nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability, therefore, including in respect of direct indirect or consequential loss or damage, is expressly disclaimed. The views expressed in this podcast, or not necessarily those of Goldman Sachs and Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs too. That listener, nor to constitute such person a client of any Goldman Sachs Entity