Millennials came limping out of the Great Recession with massive student debt and crippled finances. Here's what the generation is up against if the coronavirus triggers another recession.

Getty Images; Samantha Lee/Business Insider

Millennials are on the brink of becoming a double-recession generation, all before the age of 40.

• The coronavirus pandemic has ignited fears of a global recession.
• In the week ending March 28, a record 6.6 million people in America filed for unemployment.
• A potential recession would spell particularly bad news for millennials, who turn ages 24 to 39 this year, since the oldest among them weathered the Great Recession early in their careers, if not immediately after college.
• Millennials have been dealing with a nationwide affordability crisis since the Great Recession ended, balancing increasing living costs and massive student loan debt with stagnating wages.
• Business Insider talked to dozens of experts and millennials to see how a second recession would affect a generation that's still financially behind from the last one.
• Visit Business Insider's homepage for more stories.

Greg Anderson is no stranger to long days.

For months, the 34-year-old furniture salesman has been getting up at 6 a.m. and working until 9 p.m. He spends 12 hours on the floor, six days a week, at the Raymour & Flanigan in Reading, Pennsylvania, selling furniture and talking to clients.

The schedule might look crushing, but after spending nearly a year job hunting and three months not looking for work at all, Anderson is logging the extra hours for extra money. And while he enjoys seeing the hours pay off, it's not the life he used to envision.

In 2007, Anderson was a Korean-fusion chef at a Michelin-starred restaurant in Los Angeles, where he lived in a $750-a-month apartment. Feeling burnt out, he took a break and left for Southeast Asia. The day he boarded the plane just so happened to be September 16, 2008 - the day after the collapse of investment bank Lehman Brothers, which set off a cascade of stock market crashes and investment bank failures that kickstarted the global financial crisis of 2008.

"I came back to a completely different world," Anderson told Business Insider of his return to the US six months later. Business at his former restaurant was on the decline, leaving him out in the cold when he inquired for work again.

Courtesy of Greg Anderson

Greg Anderson, age 34, said the financial crisis changed his world. He could no longer find work as a chef and had to move from LA back to his hometown of Reading, Pennsylvania.

After spending a month apartment hunting in LA, Anderson moved in with his mom in Reading, who helped get him a job as an office manager. Since then, Anderson has worn many titles: optician, writer, and full-time student at a community college, among them.

"I realized I could never return to the chef's world," he said, adding that if it weren't for the Great Recession, "I'd probably still be in LA in cooking; it was a passion until I stepped away from it. The only job I could get in food at Reading was McDonald's at $8 an hour. It kind of ruined it for me."

More than a decade later, Anderson and many of his American millennial peers are still dealing with the aftermath of the last recession - at a time when they're also facing the high possibility of another one. Multiple Wall Street firms have predicted that the US will fall into a recession from the social distancing measures brought on by the coronavirus pandemic, while some experts have said that the country - and the world - is already in one.

As the coronavirus swept across the US, the Dow saw its biggest drop since 1987. It has since rebounded, but the stock market has been teetering back and forth between a bear market and a bull market for four weeks. And as businesses from retailers to restaurants have been forced to temporarily shutter their doors across the nation, unemployment claims hit a new record high of 6.6 million for the week ended March 28. That broke the previous record, of 3.3 million claims, set just the week before, for the seven days ended March 21.

Business Insider/Andy Kiersz, data from FRED

Unemployment claims more than doubled within a week during the first month of the coronavirus pandemic.

To find out how the last financial crisis impacted millennials, I spoke with dozens of people between the ages of 24 and 39 across the US who shared stories of their struggles finding work and building long-term wealth. I also spoke with nearly a dozen experts - economists, generational researchers, and financial advisors - who explained the devastating effects a recession can have on each generation and why the last one was so brutal, in particular, for America's then-youngest generation.

As Anderson's situation shows, millennials haven't yet been able to put the Great Recession in the past. How will they, a generation still playing catch-up from the 2008 financial crisis, face up to a second recession before their oldest members even turn 40?

Millennials still feel the lingering gravity of the last financial crisis

The financial crisis of 2008 left no generation untouched: Silent, boomer, and Gen X households all experienced wealth loss. The younger the generation, the worse the short-term repercussions; Gen X (those born between 1965 and 1979) was hit hardest wealth-wise, but it also recovered best.

In 2018, the St. Louis Federal Reserve's Center for Household Financial Stability (CHFS) took a deep dive into the demographics of wealth, analyzing more than 25 years worth of Federal Reserve data. One of the series' reports sought to find out to what extent the recession had altered American families' financial behaviors. Two of the report's authors, Bill Emmons, assistant vice president and lead economist at the St. Louis Fed, and Lowell Ricketts, lead analyst, spoke with me about generational impacts of recessions, expressing individual views that aren't on behalf of the Fed.

Business Insider/Skye Gould

Ages shown above indicate the age each generation will turn in 2020. Millennials will turn ages 24 to 39.

They found that the 2008 economy served an especially potent cocktail of income loss and wealth decline to the 30- and 40-somethings - many of whom were recent homeowners - in the form of unemployment and the housing downturn. Even though the older families past age 50 also lost wealth, Emmons said, they were more insulated from the job market and managed to recover.

But when it comes to millennials, defined by Pew as those who turn ages 24 to 39 in 2020, the story takes on a different color.

Mark Muro, senior fellow and policy director at Brookings Institution, told me that millennials are colored by the catastrophe of the last financial crisis. "Millennials have lifelong damage given the severity of the Great Recession," he said. "They're still overshadowed by it with new consequential burdens coming at them."

The oldest millennials were 26 when the crisis began in 2007, an age at which most of the generation hadn't yet accumulated substantial wealth. It's this cohort that bore the true brunt of the financial crisis. From the very beginning of their careers, they entered a tough job market and experienced wage stagnation. On top of that, they were faced with rising living costs and confronted with their own student-loan debt - which, thanks to low wages, was difficult to repay.

Millennials born in the 1980s, per the St. Louis Fed report, are at risk of becoming a "lost generation" that may never be as rich as their parents. As of 2016, people born in the '80s had 34% less wealth than they likely would have if the financial crisis hadn't occurred.

As Muro put it, "Older millennials were squarely hammered."

"Older millennials were squarely hammered."

Twelve years later, the financial situation still looks bleak for millennials, who find themselves in the midst of an affordability crisis. As of 2017, young adults ages 25 to 34 have only seen a $29 increase in their income compared to their 1974 counterparts when adjusted for inflation, while those ages 45 to 54 saw a $5,400 growth in income over the same time period. Millennials' paltry wage increase hasn't kept up with all the living costs that inflated in the 2010s, including rent, home prices, and college tuition.

Another recession could be a double whammy for older millennials - especially homeowners with mortgages

Dan Ceresia is a 38-year-old single dad of two who lives in Napa, California, and graduated college in 2009, right after the Great Recession.

Unable to find work with his mass communications and theater degrees, he spent years cycling through various jobs: insurance agent at Geico, lab technician at LensCrafters, wine buyer at Bread Garden Market. The latter led him to complete an executive MBA from Sonoma State's Wine Business Institute, and he has spent the last two-and-a-half years looking for work and picking up side gigs. In late 2019, a decade after graduating, he finally launched his own wine-consultancy business.

mTaira/Shutterstock

Downtown Napa, California. It took Napa resident Dan Ceresia, age 38, a full decade to gain a foothold in his career. He now runs a wine-consultancy business.

It's the oldest millennials - people like Ceresia and Anderson - who are of the gravest concern to Muro. They're hitting life milestones like starting a family and buying a home, but they don't have the same time that younger generations do to get back on track financially. Many of them haven't yet paid off student loans and can't afford to buy a home, leaving them in the spiral of renting. And of the 28% who have bought homes and have a mortgage, half owe more than $100,000 a piece, a survey by Insider and Morning Consult found. The result, Muro said, is a recipe that could yield "disturbing impacts" in a second recession.

While Emmons said he isn't expecting another housing disaster, and Ricketts added that they're seeing more stable endings in the mortgage market, a potential housing disaster would spell bad news for the 28% of millennials who recently bought houses and have a lot of debt.

The Insider and Morning Consult survey also indicates that half of millennial respondents have delayed buying a home because of money. Hiding behind that statistic is the glimmer of a financial positive: Because younger generations are waiting longer to become homeowners, families might not have to borrow as much by the time they buy and lower prices might be helpful in an entry-level market, Emmons and Ricketts said. Those who haven't purchased, like Ceresia, won't be hurt by a decline in an asset they don't have.

But some have resigned themselves to the reality that they'll never be able to buy: Ceresia said the Great Recession prevented him from accumulating assets and developing the level of wealth for such a purchase.

Seventy percent of his income, he said, goes to covering his expenses - half goes toward his rent-controlled $2,700-a-month Napa apartment. "Homeownership is so out of my reach that I don't even consider it a realistic or attainable goal [for myself] in the US," Ceresia said.

Young millennials will likely bear the brunt of a slower job market

While older millennials may be more vulnerable in terms of building wealth, younger millennials, who experienced the Great Recession's recovery period and entered a better job market, would face a different set of challenges during a second recession - particularly in the job market and through income loss. All experts I spoke to reiterated a typical effect of recessions: They tend to hit younger workers harder in the short term.

When it comes to the job market, Heidi Shierholz, a senior economist and the director of policy at the Economic Policy Institute, said she anticipates a millennial age split. "The way a recession can really hurt people just starting out can have lasting effects," she said. "There's a lot of evidence that the first post-grad job you get sets the stage in some important way for later."

Millennials who are 25 and 35, respectively, are in different places in their careers, she said, with the latter being more established. "But if they don't have a job or get laid off, the hard thing about searching for a job during the downturn is that there are fewer available."

And in a recession, companies might hire less than they usually do or not increase pay for employees, especially younger ones, said Winnie Sun, managing director of Sun Group Wealth Partners. Schierholz's and Sun's sentiments are already proving true: The economic freeze created by the coronavirus pandemic has so far led to a hiring freeze among many companies.

A recent study by the St. Louis Fed anticipates that the current wave of massive layoffs, if it continues unabated, could lead to 53 million Americans who want to work but are out of a job in the second quarter of 2020. That would mean an eye-popping unemployment rate of 32%. For comparison, in 2009 at the peak of the Great Recession, unemployment rates stood at 10%.

Business Insider/Andy Kiersz, data from St. Louis Fed

During the Great Recession, the unemployment rate peaked at 10%. The St. Louis Fed is predicting the unemployment rate during the coronavirus pandemic will skyrocket to 32.1% in the second quarter of 2020.

Service sector workers of all ages have so far suffered the brunt of this economic toll, but a lower earning potential for millennials translates to less money to put aside for life goals. Sun cited the Great Recession as a prime example of the loss of income-to-wealth snowball effect: It caused people to rent longer and take on jobs below their education levels, thereby hampering their abilities to build wealth.

Consider Emily Baniak, now 28, who entered college in 2009 with the dream of becoming an interior designer. She recalled that a professor, a former architect who had lost his job in the recent recession, told students that job security in the design industry relies solely on the economy.

Fearful that she had made an economically unsafe career choice, Baniak, upon graduation in 2013, accepted an offer to teach art at her former high school in Punta Gorda, Florida. To her, a secure job market was worth the switch - but it wasn't without its drawbacks.

Courtesy of Emily Baniak

The Great Recession caused Emily Baniak, age 28, to change her career path from interior designer to art teacher.

"I cut my career short and took the safe route, and unfortunately, it shows in my finances," she said. As a junior designer, she would have started out earning significantly less than she does now, but would have had more opportunity for growth. "I just received my first raise in seven years of teaching. Had I stayed in the interior design industry, I could've potentially made up to $40,000 more per year than I do teaching."

Millennials are unlikely to shoulder a bigger student debt burden, but a recession might slow their repayment

A slower job market isn't the only factor affecting the generation's ability to build wealth. Student debt, Sun said, is causing millennials to postpone large financial goals by a decade or more.

The national student-loan debt total exceeds $1.5 trillion, and student-loan debt was at a record high of nearly $30,000 per borrower for the graduating class of 2018.

Philip Garcia, a 37-year-old millennial who studied business management, said the Great Recession hit him "particularly bad" because of student loans. He and his wife bought a small house in McAllen, Texas, in 2016. They are years from paying off their mortgage.

"We'll buy the house when we're 90," he joked to Business Insider.

The 2012 graduate, who now works in insurance, currently owes $57,000 in student loans. Nearly eight years out of college, he has so far only been able to pay off the interest as the principal amount owed has grown.

Those born in the '80s, like Garcia, have some of the highest debt-to-income ratios thanks to the combination of student loans and the dismal job market they entered. But experts said they don't foresee another recession bringing massive changes in student-loan debt, although it could slow repayment. And as of March 20, the government also extended financial relief to federal student-loan borrowers during the pandemic by allowing them to suspend their monthly payments for at least 60 days and slashing their interest rates to 0%.

Brad Doherty/AP Images

Borrowers can currently pause their student-loan payments for 60 days at 0% interest. This enables them to allocate their money toward other things during the coronavirus crisis - but it may slow their repayment down the road.

But unlike the mortgage situation, Ricketts said, the vast bulk of student debt is guaranteed by the government. That means there's no possibility of it bringing down banks as mortgages and mortgage derivatives did in the Great Recession. "If people lose jobs or take on debts, there will be a lot of individual pain, but it doesn't look like it would be a credit crisis the way other debts were in the past," his colleague, Emmons, said.

One typical byproduct of a prolonged recession is that more people enroll in higher education as job prospects dwindle, but this might not be the case if a coronavirus recession is short-lived. A cohort did so during the Great Recession, Emmons said, but he added that some didn't complete their degrees.

According to the US Department of Education, this pattern comes with two troublesome outcomes. First, both income and wealth levels among millennials without bachelors degrees are lower than those with degrees. And the default rate among borrowers who didn't finish their degree is nearly three times as high as among those who did. It's this group that Emmons considers to be the most worrisome; if they lose a job, he said, another recession would be very painful.

The government is firefighting a potential 2020 recession, but millenials aren't holding their breaths

In this uncertain economic climate where jobs are disappearing by the week, unemployment figures keep rising, and more and more states are issuing shelter-in-place orders, all experts I spoke to acknowledged that their predictions are hypothetical. The next recession's impact depends, ultimately, on how this unprecedented scenario unfolds.

Ricketts said he never expected to see the economy on the steep decline it's currently experiencing, but that the road ahead is still unclear. If a recession does happen, he said, it could be relatively short, as it's possible economic activity could "snap back."

He added that the policy response as of March has been more aggressive than it has been historically. The $2.2 trillion stimulus bill Trump passed on March 27 will send $1,200 checks to millions of Americans, provide zero-interest loans to small businesses, and expand unemployment benefits. It's a bad sign of the state of the economy, Ricketts said, but also a hopeful sign that some of the damage to younger generations, or any worker of any age for that matter, might be offset.

"It's a different shock to the economy," he added. "It's tough not to be somewhat unsettled. I'm hopeful we won't see a prolonged economic effect, but we don't know a lot about how it will work out."

REUTERS/Jeenah Moon

A photo taken in March shows Times Square resembling a ghost town as New York City has become the epicenter of the coronavirus pandemic in the US and the economy has screeched to a halt.

In the face of mass layoffs and a stock market drop, like the US saw in the second half of March, Ricketts noted that millennials "would be hit harder … because they would be restarting at a later age, with less working runway and more responsibilities."

Most of the experts I spoke with emphasized that another recession would certainly be an obstacle for millennials still wrestling with the aftermath of the first recession, but that the opportunities and challenges they'd face would ultimately depend on their age. While the last recession made many millennials risk-averse and cautious with their money, it also taught them how to weather an economic storm - which may have made them ready for another one.

As for the millennials I spoke with, sentiments ran from a sense of resignation to a feeling of being as well-prepared for the future as possible.

Anderson, the former chef who ping-ponged between jobs for years, was laid off from his furniture-salesman job in January after working there for four months and is still living with his mom in Reading. "I don't really see how it can get any worse, except for me being homeless," he said.

Others, though, noted that the Great Recession has actually helped them steel themselves for what lies ahead.

"If there's one thing I learned from the Great Recession, it's how to be financially secure," Baniak, the art teacher, who has now made a smooth transition to virtual teaching, said. She added that it instilled in her a fear that she should always have money saved. Every paycheck, she puts "just enough" money in her checking account to cover bills. The rest goes toward savings.

"If there's one thing I learned from the Great Recession, it's how to be financially secure."

She's terrified the global economy will collapse, but on a personal level, she feels very little stress in terms of job security and income. If a recession does strike, "I'm confident I would be well prepared," she said. "I wouldn't worry about losing my job, and if there is any reason to be thankful for the path I chose, it would be this."

Garcia, the insurance agent who lives in Texas, echoed a similar thought, even though his wife is currently the only one working because of the coronavirus pandemic and they just started collecting food stamps. "I'm not nervous about it at all," he said. "I learned from the last one. I have a small rainy day fund that can keep us going for enough time to scramble and pick up the pieces if everything crumbles."

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