You may not think of yourself as an economic powerhouse. But according to one well-known Wall Street analyst, our generation is quietly running the whole show.
Ed Yardeni, a veteran market strategist, calls it the G-shaped economy. His argument is that baby boomers (not the stock market, not the wealthy elite) are the primary engine behind U.S. consumer spending. And consumer spending accounts for roughly 70 percent of the entire U.S. economy.
How Much Wealth Are We Talking About?
The numbers are striking. Boomers now hold a net worth of nearly $90 trillion. That works out to about 52 percent of all U.S. household wealth.
There is more coming. The Silent Generation (our parents) holds around $20 trillion. Much of that is expected to pass to their boomer children.
Boomers also control about 54 percent of all household stocks and mutual funds, worth close to $30 trillion. And they own 41 percent of all household real estate, more than any other generation.
Why Higher Interest Rates Have Not Slowed Us Down
Many economists expected high interest rates to put the brakes on spending. For our generation, it worked the other way.
Boomers hold around $3.1 trillion in money-market funds; roughly 60 percent of the household total, according to Yardeni. As rates have risen, that money has been earning more. The Silent Generation holds another 16 percent.
Meanwhile, many boomers locked in very low mortgage rates years ago, or own their homes free and clear. That insulates us from the borrowing costs squeezing younger Americans.
As Yardeni put it, for a large share of the population, higher rates are not just a cost. They are also a source of income and a reason home prices have kept rising, which adds further to boomer wealth.
The Flip Side of Staying Put
Here is an interesting wrinkle. Because so many older homeowners are reluctant to give up those low mortgage rates, they are staying in their homes instead of downsizing. That keeps the supply of homes for sale low, which pushes prices up further.
So our decision to stay put is actually one reason younger buyers are having such a hard time affording a first home.
Many Boomers Are Helping Their Kids Now
Sitting on wealth does not mean sitting back. Plenty of boomers are sharing it while they can.
A recent report from Visa Business and Economic Insights found that a quarter of millennial homeowners received help from their parents on their down payment. Without that help, those buyers said they would not have been able to purchase their homes at all.
Visa described it this way: rather than waiting to pass down inheritances later, many boomers are using their wealth to help their children clear major financial hurdles now, when the support will have the greatest impact.
But the Headlines Can Be Misleading
Before you start thinking every boomer is sitting pretty, there is an important caveat. The same Visa report estimates that boomers will pass on just $36 trillion of their $93 trillion in total wealth. That is after accounting for retirement spending, debts, charitable giving, taxes, and fees.
Despite the eye-catching totals, many boomers carry significant debt: mortgages, credit cards, auto loans, and more. Visa noted that a high share of older homeowners are cost-burdened, and that substantial non-mortgage debt means many have far less financial flexibility than the big numbers suggest.
So yes, our generation holds an enormous share of American wealth. But the picture for individual households varies enormously. The big number at the top does not tell the whole story and it never really does.
