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The party’s over for millennials

The “Millennial Consumer Subsidy” is finally coming to an end, says Derek Thompson in The Atlantic. For the past decade, people like me – “youngish, urbanish, professionalish” – have had a “sweetheart” deal from the likes of Uber and Deliveroo: almost every time we used their apps, they lost money. This is because they’re all funded by venture capital firms desperately hoping to mint the next Amazon or Facebook. The strategy was simple: grow fast, at whatever cost, and hope the profits come later. This made sense at the time: with interest rates near zero, investors could afford to “put their money into long-shot bets”. All they needed was one to come good, and it would cover all their other losses. For us consumers, that meant much of our life was heavily subsidised: taxi rides, food delivery, meal kits, mattresses, exercise machines and so on.

Well, “the party’s over”. Rising interest rates have “turned off the spigot for money-losing start-ups”. And that, combined with energy inflation and rising wages, has forced these firms to raise their prices and abandon the growth-at-all-costs strategy. This dynamic isn’t bad for everyone: one reason Uber could hire so many low-paid drivers, for example, was because those drivers had few better options. Now, with job openings “historically plentiful”, they can shop around for better pay. But it’s certainly a blow for consumers. We’ll now have to “go about living the old-fashioned way: by paying what things actually cost”.