Baby boomers subsidise the consumption habits of Generation Z and Millennials

Despite the top of COVID-related stimulus measures and warnings of weak demand from discounters like Dollar Tree and Dollar General, other data shows more robust spending behavior in other areas of the economy.

In a Financial Times op-ed Last Sunday, the CEO of Meredith Whitney Advisory Group identified that American Express data shows that Generation Z and Millennials spend five times greater than Baby Boomers.

“They have the cash to spend on things like French press coffee, Instagrammable leisure experiences, online gaming and sports betting, and yes, even avocado toast,” she wrote.

Whitney found that for households with annual incomes over $100,000, net income remained virtually unchanged between 2019 and 2022.

At the identical time, households with incomes above $150,000 have kept their spending relatively constant over the past yr, at the same time as their spending has shifted from non-essential to essential goods.

“The 24-38 generation represents 20% of the U.S. population and has the greatest purchasing power of any age group,” Whitney added. “They have benefited and continue to benefit from another type of support: their parents.”

These younger generations reside with their parents in record numbers, she said, adding that they receive subsidized expenses similar to mobile phone plans from their parents.

And since nearly 20 percent of men and nearly 12 percent of ladies ages 24 to 35 still live with their parents, in addition they don’t spend their money on housing-related expenses similar to insurance, property taxes and utilities, Whitney emphasized.

“As long as these trends continue, this age group will remain the primary driver of discretionary spending in the U.S.,” she predicted. “It’s no wonder there is so much debate about the true state of the U.S. economy.”

Whitney’s evaluation got here days before the Commerce Department’s monthly retail sales report showed a surprising uptick, suggesting that customers are still able and willing to spend more despite years of high inflation and borrowing costs.

She also repeated what “Bond King” Bill Gross said last month when he posted an analogous opinion to Xbut without supporting data.

“Hard to measure, but I suspect the upper middle class and affluent baby boomers are funding the spending of millennials and younger generations by transferring wealth/cash and paying bills, stimulating retail and the economy in the process,” he wrote. “Essentially, they are liquidating balance sheets to fund their spending. This will likely continue as long as stock/housing prices remain high.”