Older Americans set to drive next wave of US consumption growth – Firstpost

Older Americans are emerging as a powerful engine of consumption growth, with their spending expected to outpace younger adults in the coming years, according to a new report by HSBC Global Investment Research.

The report projects real spending by older generations in the US to rise by nearly 4 per cent, compared with around 2 per cent growth among other adults. The trend challenges the long-held economic assumption that ageing societies weaken consumer demand as retirement reduces household income.

“There is a common understanding in economics that ageing populations are bad for growth: investment slows, public finances become more strained, and consumption cools, too,” the report noted. However, HSBC said changing income patterns, higher wealth levels, and longer working lives are rewriting this narrative.

Older consumers have steadily increased their share of the US economy. People aged 65 and above accounted for 22% of total US consumer spending in 2024, compared with 18% in 2014. Their nominal spending has expanded at an annual rate of 6.3% over the past decade, ahead of the 4.2% growth seen among the rest of the population.

The report highlighted that spending differences between older and younger groups have narrowed significantly. Excluding housing costs, pension payments and insurance contributions, non-financial spending by those above 65 is now close to 90% of average spending levels — and even higher than spending by people aged 25 to 34.

A key factor behind this shift is rising workforce participation among older citizens. Across OECD economies, effective retirement ages have increased compared with two decades ago, helping older workers maintain stronger incomes.

“Many more older workers are staying in the workforce — a good thing from a fiscal perspective, but also in terms of keeping incomes elevated and supporting consumer spending from this demographic,” HSBC said.

The report also pointed to the growing wealth advantage of older Americans, supported by decades of asset accumulation and rising financial markets. Higher ownership of stocks and other assets has strengthened the spending capacity of retirees and near-retirees.

With ageing populations becoming a defining feature of developed economies, the rise of the “silver economy” suggests older consumers may increasingly shape future consumption trends rather than act as a drag on growth.