“People want to invest but generally can’t” was the main takeaway of CNBC’s latest Youth & Money Survey, which shed more light on the dire financial situation Millennials and Gen Z face at the start of 2024.

According to the survey, which was conducted in January, 63% of young adults believe stocks are a great way to build wealth. But the problem is that 48% of them don’t have enough money to cover more than two months’ worth of bills, let alone invest in the market.

Because of that, 61% of young adults aren’t saving for retirement each month.

More than a third (38%) of respondents admitted to living paycheck to paycheck, compared to only 3% who said they're living “extremely comfortably.

A total of 1,013 people ages 18 to 34 participated in the study.

While it may be easy to assume that young adults’ spending habits are prohibiting them from investing, researchers said the complete opposite is true.

“They’re cutting costs, they’re tipping less, they’re trying to spend less eating out […] living with parents […] they’re not acting like the economy is as good as it is,” according to Cyrus Beschloss, founder of Generation Lab, a research firm that administered CNBC’s survey.

“That’s very indicative of why more people aren’t saving for retirement, why people want to invest but just generally can’t right now,” said Clifford Cornell, a certified financial planner at Bone Fide Wealth.

Although Millennials and Gen Z are earning more compared to last year, elevated costs have made it feel like they’re running in place. It’s no wonder that adults under age 35 overwhelmingly said that the cost of living (53%) was their biggest election concern.

Inflation is still burning a hole in people’s pockets

Many economists talk about cooling inflation, but that doesn't mean things are becoming cheaper. Prices are still growing, only at a slower pace than before.

Moody’s Analytics’ chief economist Mark Zandi recently crunched the numbers and determined that the average U.S. household paid $213 more in January to afford the same goods and services as the year before.

Compared to three years ago, Americans are paying, on average, $1,019 more each month across all expense categories.

“Americans are still trying to come to grips with the idea that we’re not going back to the extended period of low inflation, low interest rates that we had in the 2010s. And that reality is not the current reality,” said Joanne Hsu, director of the University of Michigan’s consumer surveys.

Even Fed Chair Jerome Powell has acknowledged that Americans despise inflation—and that it’s probably clouding their evaluation of the economy.

“A lot of that is just people hate inflation. Hate it,” Powell said. “That causes people to say the economy is terrible, but at the same time, they’re spending money.”

All that hatred isn’t without cause. Even by the Fed’s own admission, Americans’ level of financial distress is the highest it’s been in a decade and a half.

Great Recession warning signs

One of the most tell-tale signs of financial distress is when people struggle to make credit card payments, according to the Fed.

As of last quarter, 3.85% of credit card holders are more than 30 days past due on their credit card bills—basically matching the levels seen during the Great Recession of 2008-09.

Researchers also found that 49% of Americans are carrying credit card balances from month to month—10 percentage points higher than in 2021.

“We're seeing more people carrying more debt for longer periods of time,” said Bankrate analyst Ted Rossman.

As Creditnews recently reported, average credit card balances shot up 25% by the end of 2023 compared to a year earlier. Despite higher debt balances, average credit card payments declined by 15% year-over-year.

In other words, a greater share of Americans are borrowing more and paying less.

According to Moody’s senior vice president Warren Kornfeld, “noticeable pockets of consumers” are falling into this debt trap, mainly people who haven’t benefited from the wealth effect of rising home and stock prices since the pandemic.