Will Boomers Save the Economy?

Rates Rising = Less Spending = Looming Recession. Right?

That’s what I expected. I’ve been puzzled by how the Fed’s rate increases haven’t significantly reduced consumer spending. I mean I was not surprised at the level of spending that was going on after the COVID Cash Boondoggle. But by the beginning of this year, I figured (and had read) that most of that cash was back in circulation. Not to mention that job growth has been slowing and student-debt loan repayments have begun again.

A recent piece by Gwynn Guilford in the WSJ shed light on the conundrum. It’s about the spending habits of my generation. Baby Boomers, 65 and older.

In August, 17.7% of the population was 65 or older, according to the US Census Bureau. That was, Guilford noted, “the highest on record going back to 1920 and up sharply from 13% in 2010.”

“The elderly aren’t just more numerous,” she wrote. “Their finances are relatively healthy, and they have less need to borrow (such as to buy a house) and are less at risk of layoffs than other consumers.”

Added to that, they have less debt than their children and fewer big purchases in their futures – like new homes or college funds – to spend money on.

And listen to this: As a group, they are sitting on $771 trillion in wealth!

Read more here.