Recent evidence has cast doubt on the notion that a spending splurge by those born between 1946 and 1964 is on the way.
Baby Boomers were born between 1946 and 1964 – and are the luckiest generation in history. Most of the cohort, which numbers 270 million across the rich world, have not fought wars. Some got to see the Beatles live. They grew up during strong economic growth.
Our analysis suggests that the wealth-decumulation puzzle is becoming still more puzzling, for Boomers are more miserly than previous generations. Some evidence comes from financial markets. Investment managers have created indices that track the share prices of firms which do well when oldies spend big. One index produced by MSCI, a data provider, includes companies that provide treatments for age-related diseases, leisure and tourism, and anti-ageing skincare products.
Yet, there could be deeper forces at play, making Boomers reluctant to spend what they have earned, and in turn pressing down on interest rates and inflation. Three factors stand out: “bequest motives”, the COVID-19 pandemic and worries about care. Then there is the pandemic. Old people faced grave risks from COVID-19. Many developed hermit-like habits, which they are struggling to shake off. In 2022, American Boomers spent 18 per cent less in real terms on dining out than they did in 2019. Bosses at Darden Restaurants, which runs chains including Olive Garden, a purveyor of pasta, recently noted that custom from people aged over 65 “is still below pre-COVID”.
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