We’re living in the ‘G-shaped economy’—where boomers control $90 trillion, and everyone else waits
By
Weekend Editor
August 31, 2026, 12:24 PM ET
Getty Images
Add Fortune on Google for similar content.Add us on Google
The continued resilience of consumer spending despite multiple shocks in recent years has puzzled economists, many of whom have attributed it to the wealthiest households driving most of the growth.
Recommended Video
The wealth effect from soaring stocks fuels consumption, while Americans without big investment portfolios have been forced to retreat amid elevated inflation and a stagnant job market.
But this notion of a K-shaped economy divided by class obscures a trend divided by generations, according to Wall Street veteran Ed Yardeni, who has dubbed it the G-shaped economy.
In a note early this month, he argued that baby boomers are the real driving force behind consumer spending, which accounts for roughly 70% of U.S. GDP, and detailed how much that generation dominates the economy.
Helped by an extraordinary era of financial and economic gains, boomers now have a net worth of nearly $90 trillion, or about 52% of all U.S. household wealth. That will soon be augmented by the Silent Generation, which will pass on much of their $20 trillion to their boomer kids.
“The concentration of wealth among older generations suggests that consumer spending is increasingly being supported by the spending of accumulated retirement wealth rather than labor income,” Yardeni explained.
Indeed, boomers control about 54% of household stocks and mutual funds, worth close to $30 trillion, and own 41% of all household real estate, more than any other generation.
That’s why boomers can keep spending briskly despite high interest rates and inflation, he said. In fact, higher interest rates actually work in their favor, while elevated borrowing costs squeeze younger Americans.
Boomers hold around $3.1 trillion in money-market funds, roughly 60% of the household total, allowing them to earn more interest income as rates rise, according to Yardeni. The Silent Generation has another 16%.
By contrast, many younger Americans have yet to invest, and those who have tend to skew their holdings toward stocks more sensitive to higher rates.
Paid Content
Why insurers should reward wildfire resilience
From Mercury Insurance
In addition, high mortgage rates are pricing millennials and Gen Zers out of the housing market, especially as they start families and need bigger homes. Many boomers, however, have locked in ultralow mortgage rates from years ago or own their homes outright.
Because older homeowners are reluctant to give up their low mortgage rates, they are staying put rather than downsizing. That limits the supply of homes available for sale and boosts home prices—adding further to boomers’ wealth.
“This dynamic helps explain why higher interest rates have done less to restrain consumer spending than many economists anticipated,” Yardeni added. “For a large segment of the population, rates are not simply a cost of borrowing. They are also a source of income and the reason that home prices are rising!”
canisgallicus 