We may have to thank the baby boomers for the strength of the US economy.
The economy is often said to be in the midst of a K-shaped divergence, a dynamic in which the top earners account for most of the growth and spending, while lower-earning Americans face greater economic pressure.
But, according to Ed Yardeni, a longtime market vet and the president of Yardeni Research, the driving force behind the US economy more likely lies in the spending habits of older Americans specifically, who are doing well enough to both prop up the economy and extend financial help to their younger kids and relatives.
In a note to clients on Tuesday, Yardeni called it the “G-shaped” economy, flicking at the idea that much of the boomers spending is directed toward grandchildren and adult children.
“Our alternative is the ‘G-shaped’ economy, in which older Americans, who tend to be among the wealthiest households, provide financial support to their younger adult children and grandchildren,” Yardeni said. “While Baby Boomers are thriving, younger generations are confronting an affordability crisis.”
Here are the signs he sees that baby boomers are a major pillar of support for the economy.
Heavy spending
First, boomers are known to be the wealthiest generation. The cohort, which is typically defined by people born between 1946 and 1964, is holding onto around $89.6 trillion in assets, or half of all US household wealth, according to Fed data.
Boomers have also been some of the economy’s biggest spenders in recent years. The generation recorded an average annual expenditure of $69,303 in 2023, the most recent available year according to the Bureau of Labor Statistics.
“Baby boomers don’t stop spending when they retire,” Yardeni said. “For the wealthiest generation in history, retirement means more time for spending on goods and services. The spending data already confirms that Baby Boomers are actively driving consumption growth across major categories.”
The group’s spending habits likely contributed to US recreational spending reaching a record high in March, Yardeni said, citing his analysis of LSEG data.
Boomers are also spending more on their homes, he added, with house-related spending recently hitting a record. The generation owns around a third of all US housing wealth, according to an analysis from the National Association of Homebuilders.
Retirees also appear to be driving the travel boom in the US. Total travel spending is expected to grow to $1.37 trillion this year, per the US Travel Association.
Jobs growth
There’s also evidence that the healthcare needs of baby boomers are fueling job growth in that corner of the market, Yardeni said. Healthcare has been one of the few major bright spots in the job market in recent years.
The private education and healthcare sectors gained 618,000 jobs in the year leading up to April, according to the Bureau of Labor Statistics, while all other sectors lost a combined 367,000 jobs.
Financial and housing-related help
One 2026 survey found that 70% of millennials and Gen Zers said they borrowed money from a family member for basic expenses.
Younger Americans are also increasingly living with older Americans. Around 18% of adults aged 25 to 34 were living in a parent’s home last year, according to a study from the Pew Research Center.
“Boomers are not just spending their own wealth; they are also transferring a significant portion of it to the younger generations who are struggling. Those transfers help provide a floor to aggregate consumption from below even as spending by Baby Boomers drives it from above,” Yardeni said.
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