In just 10 years, the majority of economic power could be in the hands of people that are currently struggling to afford rent
Many Brits in their 20s are spending most of their income on rent and take advantage of every discount and meal deal available to make ends meet, feeling far from influential in the broader economy. However, there is hope on the horizon.
A recent report from the Bank of America suggests that they may just need to bide their time as they ascend the corporate ladder and accumulate some inherited wealth. The report predicts that by 2035, Generation Z will be the largest and wealthiest generation in the world, urging businesses to prepare for what will soon be their most significant customer base.
Currently, the oldest members of Gen Z are only 27, while the youngest are 12. With many either at the beginning of their careers or still in education, this generation does not have much income compared to their older counterparts, with many of the older Gen Z members living paycheck-to-paycheck.
This means they have little economic influence overall, as the small amount of money they do earn is spent solely on necessities. However, they are experiencing significant wage increases, around 8% per year as of February, as more of them enter the workforce.
Two years ago, Gen Z earned an income of $9trillion, but this figure could skyrocket to a staggering $36trillion by 2030 and $74trillion by 2040, according to the new report. It suggests that Gen Z’s rapidly increasing income could coincide with the great wealth transfer expected in the next decade.
The great wealth transfer is anticipated to pass down $84trillion of inheritance to younger generations, although most will likely be exchanged between Gen X and millennials. Gen Z could receive as much as 38% and, combined with their wage increases, could quickly inflate their economic power.
Gen Z’s paycheque-to-paycheque lifestyle has also resulted in more discretionary spending than their predecessors. They already show a high interest in areas such as investing, wellness and fintech, which could entirely reshape businesses and the economy once they gain more spending power.
Struggling to meet their own bills, Gen Z are also more likely to spoil their pets rather than start a family, further shifting their spending and income habits. The generation is also largely overqualified and underemployed, leading many into jobs that aren’t the right fit or for which they are vastly overqualified at the start of their careers.
The report highlighted: “It’s likely they will be among the most disruptive generations to economies, markets, and social systems. 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.”