American consumers are maintaining spending levels despite challenges posed by high housing costs, debt, and everyday expenses. Economists have discussed whether the economy fits a "K-shaped" model, where higher-income households' spending overshadows financial struggles faced by lower- and middle-income groups. However, economist Ed Yardeni of Yardeni Research suggests a different view, referring to a "G-shaped economy" that reflects generational divisions rather than just income disparities.
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Yardeni noted that baby boomers are living longer and are more active, leading them to spend effectively on themselves as well as on their adult children and grandchildren. Older Americans typically possess investments, retirement savings, and home equity, giving them greater financial flexibility. He emphasized that there is an affordability crisis primarily impacting younger individuals, while older Americans have accumulated significant wealth.
A recent survey by Principal Financial Group, exclusively shared with CNBC, indicated that 53% of baby boomers feel capable of managing their debt, compared to only 42% of Generation X and millennials, and 39% of Generation Z. The survey, which included 1,000 respondents and had a margin of error of plus or minus 3.1 percentage points, also revealed that 41% of boomers expressed satisfaction with their financial situation, compared to 29% of Gen X, 36% of millennials, and 34% of Gen Z. Furthermore, 52% of boomers reported sufficient financial knowledge to make confident decisions, exceeding the figures for younger generational groups.
Federal Reserve data highlights changes in wealth across generations, showing that families led by individuals aged 75 or older experienced a 37% increase in inflation-adjusted median net worth from 2022 to 2025. In contrast, families headed by someone under 35 saw their median net worth decrease by 23% during the same period. Other age groups showed less significant changes: a 5% increase for families aged 35 to 44 and a 3% rise for those aged 55 to 64, while net worth declined by 6% for families aged 45 to 54 and 4% for those aged 65 to 74. The Fed attributed retirement income growth as a significant factor enhancing wealth for the oldest households.
Data indicates that older Americans are increasingly utilizing their accumulated wealth for consumer spending. A report from the JPMorgan Chase Institute noted that during the three months ending in April 2026, 8.2% of individuals transferred money from investment accounts to checking accounts, a notable rise from 4% in the same period in 2019. Investment withdrawals have also made up a larger portion of consumer spending, rising from 3.5% to 6.8% within that timeframe. The report highlighted that older individuals and those with higher incomes are more likely to draw from these accounts to support spending. Among Americans aged 65 and older in the top income bracket, 37.3% made net withdrawals from investment accounts in 2025, compared to 24.5% in 2019, with these withdrawals representing a growing share of their spending.
Experts point out that while this generational wealth gap is significant, it does not imply that all baby boomers are financially secure or that all younger Americans are struggling. However, this divide is increasingly important for understanding consumer behavior in the U.S. economy.
—CNBC's Stephanie Dhue contributed reporting.