Adult children find themselves moving back home in an effort to reduce costs, or simply because they are unable to live independently due to lack of employment or low income. Recent college graduates may view living with parents as the only viable option as they prepare for independence and search for jobs in a market with high unemployment.
From a financial standpoint, living with others and sharing expenses makes good sense. Nonetheless, there is a negative impact on the economy as households are blended. When people do not form new households, their choice diminishes additional business in the form of services and goods sold to multiple households. In a recent New York Times article, Catherine Rampell discusses the impact on the economy in terms of lost rent, household goods like a “bed, desk, couch, doormat, or crockery set,” and loss of new services such as cable for TV and the Internet. According to Moody’s Analytics, “based on demographics, there should be about 1.1 million more households in the United States today than there actually are”. At any given time, a search on Craig’s List for housing and roommates highlights the number of people in potentially desperate situations needing an inexpensive place to live.