The Spending Power of Baby Boomers Supports Private Consumption in America

The rise in private household spending in America, despite the Federal Reserve's interest rate hikes, can partly be attributed to an aging population.

Wealth Concentration in the United States

Components of wealth in America for each generation by asset and investment categories [all values in billions of dollars]

Data for the first quarter of 2025. Source: Board of Governors of the FED

Note: Generational distributions are defined by birth year as follows: Silent and Early = born before 1946, Baby Boomer = born between 1946 and 1964, Generation X = born between 1965 and 1980, and Millennial = born in 1981 or later.

According to the Census Bureau, in August 2023, 17.7% of the total American population was 65 years or older. This is a record number since 1920 and a significant increase from the 13% recorded in 2010. In other words, even in the United States, the population is aging, which is not an isolated phenomenon on the global stage. But let's see what the implications of this phenomenon are on the American economy.

In America, not only are there more Baby Boomers than in the past, but their financial situation is relatively solid. They have less need to take out loans, such as a mortgage for buying a home [because they have long since paid off their mortgage], and are less at risk of layoffs compared to other groups of American consumers [because they are already retired..]
 

Disposable Income and Spending Power of the Baby Boomer Generation in America

The American Baby Boomer generation has significant spending power. In 2022, the group of American consumers over 65 years old accounted for 22% of total American household spending [the highest share since 1972, the year when the publication of statistical data on American household spending and consumption began]. This same percentage was 15% in 2010. The average spending of American households composed of one or more people aged 65 or older increased by 2.7% in 2022 compared to 2021 [adjusted for inflation], compared to a spending increase of 0.7% for households with members under 65 years old. The spending of households led by Baby Boomers has increased by 34.5% since 1982, compared to a 16.5% increase for younger households.

Spending on Goods and Services in America by Income Bracket

 

The Wealth Accumulated by American Households and Its Effect on Consumption

Another factor in favor of the Baby Boomer generation is their relatively strong finances. Americans aged 70 and over now hold nearly 26% of family wealth, the highest level since 1989, according to the Federal Reserve. According to Fed calculations, the Baby Boomers have accumulated wealth amounting to $77.1 trillion. And it is wealth that can easily be turned into spending because, in economic theory, the link between accumulated wealth and consumption has been widely confirmed.

Percentage of Assets Owned by Households in the Over 70 Income Bracket in the United States