New data from Bank of America’s BofA Global Research unit about Generation Z reveals that while the generational cohort has the potential for robust spending power, they are not savers of money.
In its research report, titled “Gen Z: A New Economic Force,” the authors said between significant wealth “and increased spending levels over the next 10 years, the consumption patterns of Gen Z will have a strong influence on the global economy. In roughly the next five years, they will have globally amassed $36 trillion in income and that figure is expected to surge to $74 trillion by around 2040.”
This report follows research from Gen Z Planet that pegged the spending power of Generation Z in the U.S. at $1.1 trillion due to them entering the workforce in greater numbers.
The BofA Global Research report noted that spending growth on necessary and discretionary items among Gen Z “has been faster than the overall population, according to Bank of America credit and debit card data.”
But when it comes to saving money, the data tells a different story. “While their bank deposit balances provide a buffer, Gen Z spending was nearly twice as much as they had in savings, possibly as the high cost of living exerts financial pressure,” the report stated. “While increased wage growth helps ease some of this pressure, Bank of America data also suggests Gen Z is facing an increasingly difficult labor market.”
The report’s authors said the number of Generation Z households receiving unemployment increased nearly 32 percent year-over-year in February “and unemployment among new entrants to the labor market is on the rise.”
Looking ahead, the report’s authors said beyond increasing income levels, “Gen Z could also see the largest increase in spending. By 2030, their global spending is expected to reach $12.6 trillion compared to $2.7 trillion as of 2024.”
“Thus, it’s likely they will be among the most disruptive generations to economies, markets and social systems,” the report said. “Whether it’s due to changing diets or reduced alcohol consumption or saving and housing, Gen Z will redefine what it means to be a U.S. consumer.”
Digging deeper in the savings behavior, the report concluded that Gen Z’s savings “don’t stack up to their spending levels” and added the data showed that “almost a third (32 percent) feel they are behind where their parents were at the same age in meeting financial goals. And while Gen Z understands the importance of saving, many are not able to put aside as much money as they’d like.”
