We’re living in the ‘G-shaped economy’—where boomers control $90 trillion, and everyone else waits

The current economy, often described as a G-shaped economy, features baby boomers controlling a staggering $90 trillion in wealth, while other generations struggle. Wall Street veteran Ed Yardeni coined this term, arguing that the G-shaped economy is driven by the wealthiest households, not by class divisions. Baby boomers now possess nearly $90 trillion in net worth, accounting for roughly half of all U.S. household wealth.

This trend is expected to continue as the Silent Generation, with a net worth of $20 trillion, passes their wealth onto their boomer children.

The concentration of wealth among older generations allows them to maintain high levels of consumer spending, even amid economic shocks. Boomers control about 54% of household stocks and mutual funds, worth close to $30 trillion, and own 41% of all household real estate. Higher interest rates actually benefit boomers, as they hold significant amounts in money-market funds, which earn more interest income as rates rise.

In contrast, younger Americans have fewer investment options and are priced out of the housing market due to high mortgage rates. As a result, many boomers remain in their homes, limiting the supply and driving up home prices.

This G-shaped economy highlights the contrast between the financial flexibility of older generations and the financial challenges faced by younger generations. While boomers are insulated from the labor market disruptions that AI could cause, they are still burdened by significant debt. Despite controlling a large share of wealth, many boomers have limited financial flexibility and may not pass on as much wealth as initially expected. Younger generations, therefore, should not expect a significant windfall from inheritances.