Despite higher incomes, entry into a stronger labor market, and relatively healthier overall balance sheets, Generation Z feels significantly worse about their financial situation compared to Millennials at the same age. In our view, the root cause lies in persistently high inflation and a sharp deterioration in affordability, which has dampened confidence and made typical life goals like buying a home seem even more out of reach. (Millennials, born approximately between 1981–1996; Generation Z, born approximately between 1997–2012.) In the Federal Reserve's SHED survey, a net 17.7% of respondents aged 19 to 27 in 2015 stated that their financial situation was better than a year ago, roughly double the reading for all adults. By 2025, this figure for the same age group had dropped to -3.1%, only slightly higher than the -4.5% for all adults. The University of Michigan survey shows a similar trend. Historically, confidence among the 18 to 34 age group has been significantly higher than the overall index, but in 18 of the past 20 months, it has fallen below the overall reading. This had never occurred before 2018. In September, the reading for young people showed some recovery, but it is currently unclear whether this marks a trend reversal or a one-off fluctuation.