The U.S. economy has a love-hate relationship with its ageing population. In the long term, an older population is a headache: It means a shrinking labor pool leading to slower growth, and increased social care costs. On the other hand, the United States’s older generations are the ones—directly or indirectly—keeping the economy out of a recession at the present moment. Take the labor market. According to the Federal Reserve Bank of Richmond, 97% of net private-sector job creation in 2025 was in health care and social assistance. January’s jobs report was much the same: Of the 130,000 jobs the Bureau of Labor Statistics reported the economy added in the first month of 2026, 82,000 were in health care. There’s also the matter of spending. As well as being key consumers, baby boomers are the wealthiest generation in history. People aged 55 and over own 73% of the nation’s entire wealth, and 31% of U.S. wealth is owned by people aged 70 or older, according to Fed data. And where is all that wealth being held? The eye-watering sums being funnelled into AI capex had to come from someone. Boomers—particularly wealthy older people—are “driving the train” when it comes to the economy right now, economists told Fortune. If boomers sneeze, the rest of the economy catches a cold. It’s not a comfortable balance to sit in.
Reliable consumers
Wall Street has continually expressed its pleasant surprise at how remarkably well consumers have held up since the pandemic. Still, more recent data points have prompted discussion of a K-shaped economy: The idea that the fortunes of wealthy consumers and those on the lower end of the income scale are increasingly diverging. Moody’s chief economist Mark Zandi is of the opinion that without wealthy consumers—indeed without older, wealthy consumers—demand would collapse and the U.S. would be heading toward a recession: “They’re driving the train.” In January, Zandi analyzed Fed data and highlighted that 59% of all consumer spending now comes from the top 20% of earners. In an exclusive interview with Fortune, he added that people over 50 are doing the “bulk of spending,” and that trend has increased steadily over the years. As such, the economy’s reliance on a small cohort of spenders is rising.
“We have been looking at spending based on income, but you can do similar analysis based on age and you see the same thing,” Zandi told Fortune. “It’s pretty top-heavy. If you look at the distribution of wealth or income within the folks that are in their 50s, 60s, and 70s, that’s also very skewed. There’s reasons to be nervous there, because you’ve got boomers that are lower income, that are living on the edge, [boomers] of middle income, that are making it by—and when i say income, I mean income and wealth—so the same concerns we have about the broader income and wealth distribution applies to that group of older Americans.”
Boomers are also a reliable source of cash in markets. They own the vast majority of corporate equities and mutual funds, some $30 trillion as of Q3 2025, according to Fed data. “They’re the ones that own the AI stocks, they’re the ones that own the bonds that are being issued by AI companies, they’re very much a big part of the financing source for the AI investment boom,” Zandi added, “No doubt about it.”
But that comes with a flip side that was highlighted by David Doyle, Macquarie’s head of North America economics. A declining personal savings rate (peaking during COVID at 31.8% and declining to 3.6% as of December 2025—below the historical trend) is likely a symptom of boomers spending down their assets during retirement. For their spending to continue, therefore, asset prices and sentiment must remain high.
“It probably makes the economy more vulnerable to an asset price correction than would have been the case 15 or 20 years ago,” he told Fortune in an exclusive interview. “What I’d be concerned about is a scenario, because most baby boomers would have a hedged portfolio … [is] if you ended up with something like what we had in 2020 to 2022, where equities were correcting and at the same time, bond yields were rising, so bond prices were falling. That’s the kind of scenario that would, I think, have particular negative impacts on Baby Boomer consumption.”
Doyle said another factor that could clip the wings of boomers is inflation, which has been sticky. That’s because, unlike their salaried counterparts, boomers’ asset returns aren’t tied to inflation and are therefore more susceptible to declines in the real value of their disposable income. “If you’re a boomer and you’re not working anymore, you don’t have that offset to any sort of inflation shock,” he warned. “This could actually start working the other way.”
Labor market safety net
An older generation is also a key motivator behind most job openings in the U.S. right now. The health care sector accounted for the vast majority of new openings last year, which economists widely attribute to a growing population aging into a new phase of care needs. Medical professionals previously told Fortune the industry is racing to train talent in the specialties needed to care for an older population.
This has been compounded by the fact that net immigration in the U.S. has begun to decline and will continue to do so, according to Census Bureau data, while the industry relies heavily on immigrant labor.
A study from the Baker Institute found that the share of foreign-born health care workers increased from 14.22% to 16.52% between 2007 and 2021, even as the share of the U.S. population that is foreign-born grew by just 1 percentage point to 13.65% in that span.
On the flipside, more than 30 million Americans will turn 65 between now and 2030—an age often associated with retirement. So, while an older population is providing much-needed demand in a sluggish jobs market right now, there will be a significantly smaller workforce to fill the roles when momentum picks up in other sectors down the line.
This slows growth: The Stanford Institute for Economic Policy estimated (even more than a decade ago) that a 10% increase in the fraction of the population ages 60+ decreases GDP per capita by 5.7%.
“The way I frame it in my own mind is demand and supply,” Zandi said. “The aging of the population is supporting demand, and we can see that clearly in the healthcare industry—that’s near term. But, on the supply side, the aging is becoming an increasing headwind to growth, and you can see that in terms of labor supply and also in terms of productivity growth. The demand side effects near term are very positive and necessary in keeping us out of a near-term recession, but [it’s] a very significant supply-side weight on the economy going forward.”
Individuals won’t age overnight, so the reduction in the workforce will be a “corrosion” of growth rather than a cliff edge, he added. But assuming all else is equal, immigration and AI dynamics which could allow the shift to be “much more graceful,” he said.
“Immigration policy [will] very likely will shift at some point in the future, as it becomes clear that we need workers,” Zandi predicted.
Likewise, AI-related productivity gains mean “it could work out OK,” and Doyle agreed. “Some people fear a big shock in unemployment, I’m not necessarily convinced. I think probably what would happen is that jobs growth would move into other areas … it’s much easier to focus on what’s being destroyed because that’s obvious, but it’s a lot harder to see what’s being created. You have to scratch your head and think about how that would occur, and how the economy would come into an equilibrium on that basis.”
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