Fewer young people achieve major milestones as life plans are delayed due to financial reasons
Fewer young people in the United States are reaching traditional adult milestones, according to new data from the U.S. Census Bureau.
Benzinga – News
This is a question that has puzzled economists, investors, and strategists for the past few years. Why are American consumers reporting record-low sentiment readings yet continuing to spend as if all is well with the world?
All kinds of economic data make the question a real mystery. The University of Michigan Consumer Confidence Index hit an all-time low of 44.8 in May, marking the third consecutive month of decline. Inflation is becoming more serious throughout the economy. And the job market is lukewarm at best.
Meanwhile, spending continues to rise, but at an increasingly slower pace. So where do consumers get that appeal?
Renowned investment strategist Ed Yardeni has a theory: We live in a “G-shaped” economy.
G stands for “generation,” Yadeni wrote in a recent memo, describing a society in which “older Americans, who tend to belong to the wealthiest households, provide financial support to their younger adult children and grandchildren.”
“In our opinion, much of the affordability crisis in America today is affecting younger generations, and older generations of baby boomers are helping them deal with the crisis.”
The “G” theme is a slight inversion of another idea popular in recent economic discussions. Many analysts have noted that the economy has a pronounced “K” shape, which visually shows that the haves, represented by the top diagonal line, are doing better and better, while the have-nots, represented by the bottom line, are falling in wealth.
Yardeni’s theory is based on several other facts. Despite continued spending, disposable income has remained flat in recent months. However, since most baby boomers are retired, they are using their savings rather than their paychecks to support their expenses, he noted.
In fact, retired workers now make up a record 19.5% of the civilian working-age population, and their spending and work (or non-work) patterns certainly impact the overall economy.
As USA TODAY previously reported, Americans 45 and older control nearly 90% of the nation’s wealth, according to Federal Reserve household data.
Baby boomers (those born between 1946 and 1964) own 51% of U.S. wealth, including real estate, stocks, pension benefits, personal businesses, and other assets, valued at a total of $90 trillion at the end of 2025.
Certainly, parents helping their children and even grandchildren is nothing new. But the size of the boomer generation and the wealth they have accumulated is also at an all-time high, adding to what Yardeni calls “an unprecedented demographic shift with profound economic consequences.”
But while Yardeni believes intergenerational transfers will help sustain the economy in the future, some economists are starting to grow concerned.
On May 28, the government lowered its initial forecast for economic growth in the first quarter of 2026, mainly because consumer spending was slower than originally thought.
Spending is still higher than it was before the coronavirus pandemic made comparisons difficult, suggesting that “American households are generally in good health” overall, Troy Rudtka said.,sA senior US economist at SMBC Nikko Securities Americas made this comment in an analysis following the GDP release. But Americans are increasingly behind on their car loans, student loans and credit cards, Lutka said.
“The financial strain on household budgets became even more severe in the second quarter as a sharp rise in inflation reduced the personal savings rate to an ultra-low 2.6%,” Rudotka added. Spending is likely to fall as gas and food prices continue to rise, he said.
