Baby Boomers Are Still Boosting the Economy
Estimated reading time: 3 minutes
Senior Spending Surge
Economists have been somewhat surprised by the strength of American consumer spending in the face of high inflation, and interest rates. There are multiple reasons behind the phenomenon, but baby boomers likely played a role as well.
Indeed, government data shows seniors have been spending more than ever over the past few years.
Driving Consumer Spending
People 65 or older made up nearly 18% of the population as of August, the largest percentage since the Census Bureau started collecting data back in 1920. But that group accounted for 22% of spending last year, the highest level since 1972.
There are a few factors at play. For example baby boomers were likely to have paid off home loans already, or else locked in a low mortgage rate, and have less debt overall.
On top of that, retirement investment in the stock market would have appreciated during the stock market rally that followed the initial shock of the pandemic, also relieving the strain on personal finances. That said, this generalization doesn’t catch every experience of baby boomers, and nobody is immune to price hikes either. But compared to younger generations, baby boomers fared better.
Buoying the Economy
Overall, Baby Boomers have amassed a remarkable $77 trillion in wealth. In the short-term, this safety net could continue to help fuel consumer spending and protect the U.S. economy from sinking into a recession.
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