Ed Yardeni argues US economy runs on older support

G-shaped economy – A market strategist says the US economy’s momentum looks less like a split between rich and poor and more like a “G-shaped” pattern: older Americans, buoyed by wealth and spending, financially support younger relatives even as younger generations face an affor

For years. people have described the US economy as moving in two tracks at once—where top earners pull ahead while lower-earning Americans feel the pinch more sharply. But Ed Yardeni. president of Yardeni Research and a longtime market veteran. doesn’t buy the story that the driving force is mainly a K-shaped divide.

In a note to clients on Tuesday. he pointed to another engine: the spending habits of older Americans and the way their financial support flows down to younger adult children and grandchildren. Yardeni called it the “G-shaped” economy—shifting the spotlight from income splits to intergenerational transfer.

“Our alternative is the ‘G-shaped’ economy. in which older Americans. who tend to be among the wealthiest households. provide financial support to their younger adult children and grandchildren. ” Yardeni wrote. “While Baby Boomers are thriving, younger generations are confronting an affordability crisis.”.

He also dismissed a more direct framing of baby boomer consumption as being primarily aimed at grandchildren and adult children. describing his alternative as the pattern that better explains where economic strength is coming from. In his view. older households don’t just keep spending; they also extend help that supports consumption below while their own spending pushes growth from above.

The case starts with money—and where it is concentrated. Yardeni pointed to the baby boomer generation as the wealthiest cohort in the US. The group is typically defined as people born between 1946 and 1964. and Yardeni cited Fed data showing they are holding about $89.6 trillion in assets—around half of all US household wealth.

That balance sheet matters, but so does the habit of using it. Yardeni said baby boomers have continued spending in retirement. and he backed that with Bureau of Labor Statistics figures showing an average annual expenditure of $69. 303 in 2023. the most recent available year. “Baby boomers don’t stop spending when they retire,” Yardeni said. “For the wealthiest generation in history, retirement means more time for spending on goods and services. The spending data already confirms that Baby Boomers are actively driving consumption growth across major categories.”.

He connected that spending to specific parts of the economy. His analysis suggested baby boomers’ behavior contributed to US recreational spending reaching a record high in March. based on his analysis of LSEG data. Yardeni also said boomers are spending more on their homes, adding that house-related spending has recently hit a record. He cited National Association of Homebuilders analysis that the generation owns around a third of all US housing wealth.

Travel is another place the same logic shows up. Yardeni said baby boomer retirees are driving the travel boom, with total travel spending expected to grow to $1.37 trillion this year, according to the US Travel Association.

Jobs are part of the story too, and the direction runs through healthcare needs. Yardeni said evidence of baby boomer demand is fueling job growth in that sector—one of the few areas described as bright spots in the job market in recent years. He pointed to Bureau of Labor Statistics data saying the private education and healthcare sectors gained 618. 000 jobs in the year leading up to April. while all other sectors lost a combined 367. 000 jobs.

For younger households. the economic picture isn’t just about what they earn—it’s also about what they can access when costs rise. Yardeni cited a 2026 survey in which 70% of millennials and Gen Zers said they borrowed money from a family member for basic expenses. He also noted that younger Americans are increasingly living with older Americans: Pew Research Center data shows around 18% of adults aged 25 to 34 were living in a parent’s home last year.

Yardeni’s bottom line is blunt. “Boomers are not just spending their own wealth; they are also transferring a significant portion of it to the younger generations who are struggling. ” he said. “Those transfers help provide a floor to aggregate consumption from below even as spending by Baby Boomers drives it from above.”.

Ed Yardeni Yardeni Research US economy G-shaped economy K-shaped divergence baby boomers intergenerational transfer household wealth Federal Reserve data Bureau of Labor Statistics LSEG data recreational spending housing wealth National Association of Homebuilders travel spending US Travel Association healthcare jobs private education and healthcare sectors Pew Research Center millennials Gen Z affordability crisis