It coincides with a surge in anxiety and depression among Gen Zs, with the research highlighting that four in 10 young women have poor mental health.
Among young men, the rate is three in 10.
The IPPR warned that the rise in pessimism among Gen Z risked having dire consequences for the economy.
It pointed to growing signs of financial nihilism, with young people attracted to schemes promising quick riches and failing to see the point in saving or planning for the future.
Ellie Harris from the IPPR said: “Young people are telling us clearly that the deal no longer adds up. For too many, the promise that hard work will lead to security and opportunity no longer feels credible.
“Expectations shape behaviour. When young people lose faith in their futures, that doesn’t just affect their wellbeing, it risks weakening economic growth, productivity and social cohesion too.”
She added: “The challenge for policymakers is not only to improve outcomes for young people, but to rebuild belief that those outcomes are still attainable.”
A government spokesperson said: “We recognise too many young people have been locked out of opportunity with the number of those not in employment, education or training rising by 250,000 in the three years to summer 2024.
“That’s why we are bringing forward a £2.5bn youth employment support package to help almost one million young people either earn or learn.
“We are also expanding youth hubs to every corner of Britain to provide crucial skills, job and housing support for the future generation.”