The US economy has a love-hate relationship with its aging population. Over time, older people suffer from headaches: It means a labor pool that leads to slower growth, and increased social security costs.
On the other hand, the older generations of the United States are—directly or indirectly—the cause of the current economic downturn.
Take the labor market. According to the Federal Reserve Bank of Richmond, 97% of private sector job creation in 2025 was in health and social care. January’s jobs report is the same: Of the 130 jobs the Bureau of Labor Statistics reported added in the first month of 2026, 82,000 were in health care.
There is also the issue of spending money. As well as being important consumers, baby boomers are the wealthiest generation in history. People age 55 and older own 75 percent of the world’s wealth, and 35 percent of the U.S. economy is owned by people age 70 or older, according to Fed data. And where is all that wealth kept? The eye-watering investment in AI capex had to come from someone else.
Boomers – especially wealthy adults – are “driving the train” when it comes to the economy right now, economists have said. Fortune. When the boomers sneeze, the rest of the economy catches a cold. It is not a comfortable standard of living.
Loyal customers
Wall Street continued to express its surprise at how well consumers have fared since the pandemic. However, some recent data points have fueled the discussion of the K-shaped economy: The idea that the wealth of affluent consumers and those at the lower end of the income scale are increasingly diverging.
Moody’s chief economist Mark Zandi is of the opinion that there are no wealthy consumers—literally none the elderwealthy consumers—demand would decline and the US would go to the brink: “They’re driving the train.”
In January, Zandi reviewed Fed data and confirmed that 59% of all consumer spending now comes from the top 20% of earners. In an exclusive interview with Fortunehe added that people over the age of 50 are spending “a lot of money,” and that trend has gradually increased over the years. As such, economic dependence on a small group of investors is increasing.
“We have been looking at spending based on our income, but you can do the same analysis on age and you will see the same thing,” said Zandi. Fortune. “It’s pretty over-heavy. If you look at the distribution of wealth or income among people in their 50s, 60s, 70s, it’s skewed. There are reasons to be afraid there, because you have low-income boomers, who live on the edge. [boomers] of middle income, you’re doing it with—and when I say income, I mean income and wealth—so the same concern that we have about the broad income and wealth distribution applies to that group of older Americans.”
Boomers are also a reliable source of income in the markets. They own the largest amount of corporate equities and mutual funds, some $30 billion as of Q3 2025, according to Fed data. “They are the owners of AI stocks, they are the owners of the bonds that are being issued by AI companies, the main part of financing the development of AI,” Zandi added, “There is no question about it.”
But that comes with a flip side which was highlighted by David Doyle, Macquarie’s head of North American economics. The decline in the personal savings rate (peaking during COVID at 31.8% and falling to 3.6% from December 2025—below historical trends) may be a sign of boomers using less of their assets during retirement. For their consumption to continue, therefore, the prices of goods and sentiments must remain high.
“It probably makes the economy more vulnerable to asset price adjustments than it was 15 or 20 years ago,” he said. Fortune exclusive interview. “What I would be concerned about is the event, because most investors have a hedged portfolio… [is] if you end up with something like we had in 2020 to 2022, where stocks were correcting and at the same time, bond yields were going up, so bond prices were falling. That’s a situation that would, I think, have a negative impact on Baby Boomer spending. ”
Doyle said something that could clip the wings of the boomers is inflation, which is stuck. That’s because, unlike their wage-earning peers, boomers’ asset returns are not tied to inflation and are therefore less susceptible to declines in the real value of the money they dispose of. “If you are a bankrupt and unemployed person, you will not be able to do any kind of inflationary shock,” he warned. “This could start working in a different way.”
Labor market safety net
The older generation is also the biggest driving force behind job openings in the US right now. The health sector accounted for most of the new openings last year, which economists say is an aging population that has become a new area of care. Medical experts have spoken Fortune the industry is racing to train talent in the skills needed to care for the elderly.
This is compounded by the fact that net immigration to the US has begun to decline and will continue to do so, according to Census Bureau data, while the industry relies heavily on immigrant workers.
A study from the Baker Institute found that the share of foreign-born healthcare workers increased from 14.22% to 16.52% between 2007 and 2021, even as the share of the US population that is foreign-born grew by only one percentage point to 13.65% during that period.
On the flipside, more than 30 million Americans will turn 65 between now and 2030—an age often associated with retirement. So, while the majority of people are supplying the demand that is needed in the sluggish job market right now, there will be fewer workers to fill the jobs when the energy increases in other sectors down the line.
This slows growth: The Stanford Institute for Economic Policy estimated (even 10 years ago) that a 10% increase in the population aged 60+ would reduce GDP per capita by 5.7%.
“The way I do it in my head is to love and give,” said Zandi. “The aging population is supporting demand, and we can see that clearly in the healthcare industry—near term.” But, on the supply side, aging is having an impact on growth, and you can see that in terms of labor supply and also in terms of productivity growth. The expected results in the near term are very good and should keep us from a short-term recession, but [it’s] important weight on the economy going forward. “
People don’t age overnight, so the workforce reduction will be a “decay” of growth rather than a cliff, he added. But assuming all else is equal, migration and AI dynamics that can allow change are “very positive,” he said.
“Immigration policy [will] it may change at some point in the future, as it is clear that we need workers,” said Zandi.
Likewise, the availability of AI functionality means that it “can go well,” and Doyle agreed. “Some people are afraid of a big shock in unemployment, I’m not sure. I think the most likely scenario is that the growth of jobs would go to other places… it’s easy to look at what’s being destroyed because it’s obvious, but it’s more difficult to see what’s being created. You have to scratch your head and think about how that will happen, and how the economy will come.”
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