How Driving Less and Renting More May Change Our Economy
Derek Thompson and Jordan Weissmann, senior and associate editors at The Atlantic, respectively, look at the reduced car-buying, driving, and housing choices of the Millennial generation, and speculate how it will affect the economy in the September, 2012 issue of The Atlantic Magazine.
The auto companies act as if "demand for cars within the Millennial generation is just waiting to be unlocked; that as the economy slowly recovers, today's young people will eventually want to buy cars as much as their parents and grandparents did."
Thompson and Weissmann agree that "the Great Recession is responsible for some of the decline. But it's highly possible that a perfect storm of economic and demographic factors-from high gas prices, to re-urbanization, to stagnating wages, to new technologies enabling a different kind of consumption-has fundamentally changed the game for Millennials."
"When Zipcar was founded in 2000, the average price for a gallon of gasoline was $1.50, and iPhones didn't exist. Since then, it has become the world's largest car-sharing company. Zipcar owes much of its success to two facts. First, gas prices more than doubled, which made car-sharing alluring. Second, smartphones became ubiquitous, which made car-sharing easier."
Next, the editors look at the noticeable urban preferences of the Millennials that involve renting in cities rather than owning in suburbs. That could doom the economic recovery when one considers the importance of housing construction and auto manufacturing in our economy. But the editors offer an alternative outcome.
"Economic research shows that doubling a community's population density tends to increase productivity by anywhere between 6 percent and 28 percent. Ultimately, if the Millennial generation pushes our society toward more sharing and closer living, it may do more than simply change America's consumption culture; it may put America on firmer economic footing for decades to come."
Thanks to Andrew Boone