CNN - What broke the American Dream for millennials.

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Rachael Gambino and Garrett Mazzeo planned their financial life by the book: They went to college, paid down debt, saved aggressively, got married, bought a house, started a family. The dream.

But sitting at the kitchen table of their suburban Pennsylvania home — an asset they feel both lucky to own and also somewhat trapped by — they say they wouldn’t do it all over again quite the same way.

For their nine-month-old son, Miles, Rachael and Garrett agree: They’re not going to push him to pursue the same path.

“I think a lot of Millennials were forced into saying, ‘you need a four-year degree in order to be successful,’” says Rachael, who is 33. “At 18, you’re signing up to be $100,000 in debt before you even really know how to make the best decisions for yourself. I think we need to change that narrative.”

Rachael and Garrett know how lucky they are, both having steady work and parents whom they were able to live with temporarily while they saved for a down payment. Critically, they also have a tenant: Rachael’s younger sister, Kristen Gambino, 26, moved in shortly after they bought the house in 2022, helping them pay the mortgage while saving herself from an increasingly unaffordable rental market.

But the couple still feels like they’re on a knife’s edge. Their day-to-day lives are dictated by a spreadsheet where Garrett, 35, meticulously manages every dollar coming in and out.

“This is the American Dream,” Rachael says. “But at what cost? What are we paying for the American Dream now?”

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From one crisis to the next
There’s a perception so prevalent in post-Covid America it’s practically become a cliché: The economy is good but the vibes are bad.

Having skirted an actual recession last year, we entered a vibecession in which virtually all economic data suggests the United States is thriving, but people aren’t quite feeling the effects.

In a CNN poll conducted last month, a stunning 71% of Americans said economic conditions in the country were “poor,” with 38% calling them “very poor.” And that’s somehow better than in the summer of 2022, when 82% said the economy was poor.

The culprits behind the bad vibes are obvious: high prices, an impenetrable housing market, persistent inequality, rising debt.

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But less talked about are the financial resentments that have calcified in the psyche of the nation’s most populous generation over the last quarter-century. For Millennials, hit with two world-altering economic downturns before their 40th birthdays, bad vibes come standard.

Even as Millennials have made up significant ground in terms of wealth over the past four years, according to Brendan Duke, senior director for economic policy at the Center for American Progress, that shift only came after more than a decade of stagnant wages and more or less flat wealth accumulation.

They are the most educated generation in US history, but it didn’t come cheap.

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The generational wealth gap
For years, Millennials, now ages of 27 to 42, have lagged behind their Baby Boomer parents and Gen X counterparts in accumulating wealth.

Most were raised in the economic idyll of the 1990s, one of the longest recorded economic expansions in US history. But by the time they graduated college, their world had been turned upside down by the Great Recession.

Older Millennials entered the job market just as Corporate America was coming off its hinges in the worst downturn since the Great Depression.

The 2008-2009 recession made entry-level jobs scarce. It also pushed older workers to put off retirement, gumming up the corporate path for younger workers. For years after the recession was technically over, unemployment remained higher than its pre-recession 2007 level, and wages stagnated. Critics of the Obama administration dubbed the decade following the Great Recession “the barbecue economy” because the recovery was low and slow.

The result was a Millennial wealth gap that was larger, relative to other generations. By 2016, families headed by 1980s-born Millennials were about 34% below “wealth expectations” — the level economists would have predicted them to reach based on where earlier generations were at the same age, according to the Federal Reserve Bank of St. Louis.

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The nest egg myth
A common refrain Millennials heard from their Boomer parents is that buying is always better than renting. That advice is now out of date.

Central to the pitch of the American Dream is a house. Homeownership, the traditional thinking goes, is the surest way to build wealth. Save up for a down payment, buy a starter home, and definitely don’t spend too long throwing money away on rent.

That dream has become more fantasy in the Covid-era economy.

Housing inventory was already low before the pandemic — a long-lingering effect of the bubble’s collapse in 2007, which created a glut of empty homes and prompted developers to drastically scale back production. The supply dwindled even further as newly remote workers retreated from cities, taking advantage of the record-low mortgage rates.

Between 2021 and 2022, home prices surged to record highs. Then, as inflation took root and interest rates rose, those too-good-to-miss 3% mortgages vanished.

For Garrett and Rachael, missing the low-rate window was a painful blow.

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