G-shaped economy – New U.S. Census Bureau data show fewer young adults reaching traditional adulthood milestones as finances slow life plans, even as consumers keep spending. Economists are wrestling with a growing mismatch between record-low sentiment and continued purchases, w
On a month when consumer confidence sank to its lowest level on record, the shopping didn’t stop. The University of Michigan’s Consumer Sentiment Index fell to 44.8 in May, marking a third straight monthly decline, even as inflation lingers and the job market remains tepid.
Beneath that contradiction is a quieter shift that doesn’t make headlines the way monthly spending does: fewer young adults in the U.S. are reaching traditional adulthood milestones, according to new U.S. Census Bureau data. Economists say the puzzle has been building for years—how can Americans report the bleakest sentiment readings yet keep spending as if the future isn’t tightening?.
One theory gaining traction comes from investing strategist Ed Yardeni, who argues the economy may be taking a “G-shaped” form. In his framing. “G” stands for “generational”: a society in which older Americans—typically among the wealthiest households—provide financial support to younger adult children and grandchildren.
Yardeni’s point is direct. Much of the affordability crisis. he wrote in a recent note. is affecting younger generations. while older Baby Boomers help them cope. It is the kind of explanation that would be easy to dismiss if the data weren’t also pointing toward a demographic force strong enough to bend the macro picture.
Disposable income has been flattening in recent months while spending continues. Yardeni noted—suggesting the source of spending power isn’t coming primarily from paychecks. He pointed out that because many Baby Boomers are retired. the spending that keeps demand afloat is increasingly drawn from accumulated resources rather than wages.
That matters because retired workers now account for a record 19.5% of the civilian working-age population. Their choices about spending—or not spending—carry weight for the entire economy, even if younger adults are feeling the squeeze more sharply.
The “G” idea is also a reversal of another popular economic sketch: the “K” shape. In that picture, the top diagonal line represents “haves,” while the lower line shows “have-nots” falling further behind. Yardeni’s “G” theme flips the story toward support flowing across generations, not just a widening gap.
The intergenerational transfer has long been part of American life. But the scale is what Yardeni called an “unprecedented demographic shift with profound economic consequences.” He tied it to household wealth concentration among older Americans. Americans ages 45 and over control nearly 90% of the nation’s wealth. according to household data from the Federal Reserve. reported previously. Boomers—those born between 1946 and 1964—hold 51% of American wealth. including real estate. stocks. pension benefits. private businesses and other assets. collectively valued at $90 trillion as of the end of 2025.
For Yardeni, that wealth doesn’t just sit in accounts—it can smooth consumption when younger families hit affordability walls.
But even as the spending picture holds up in aggregate, concerns are growing in the details.
After the GDP release. Troy Ludtka. senior US economist with SMBC Nikko Securities Americas. described households as “largely healthy” in the aggregate. noting consumption remains higher than it was before the COVID-19 pandemic made comparisons difficult. Still. he highlighted the stress showing through household finances: Americans are increasingly falling behind on auto loan. student loan. and credit card payments.
The government on May 28 downgraded its initial estimate for economic growth in the first quarter of 2026. largely due to more tepid consumer spending than was initially believed. That downgrade adds pressure to the very question driving all of this—whether the current spending momentum reflects resilience or the ability to borrow time through family support.
Ludtka also pointed to a key timing problem for families trying to manage rising costs: the quick rise in inflation depleted the personal savings rate to an ultra-low 2.6% in Q2. With gas and food prices continuing to rise, he said spending is likely to decline.
Between the record-low sentiment readings and the persistence of spending, the facts now point to a tension households are living through: demand is being supported, but the financial strain is visible in late payments and in a savings cushion that has thinned.
The spending may still be happening—but the numbers around who can afford it, and how long that affordability can be maintained, are shifting.
U.S. economy consumer sentiment University of Michigan personal savings rate GDP growth intergenerational wealth baby boomers disposable income auto loan delinquencies student loan payments credit card payments Ed Yardeni G-shaped economy U.S. Census Bureau Federal Reserve wealth data