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young people coming of age during and shortly after World War I, esp. disillusioned by the number of people killed in the war
The young adults of Europe and America during World War I. They were “lost” because after the war many of them were disillusioned with the world in general and unwilling to move into a settled life. Gertrude Stein is usually credited with popularizing the expression.
Note: The characters in the book The Sun Also Rises, by Ernest Hemingway, are examples of the lost generation.