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The booming silver dollar

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With populations ageing rapidly, older spenders will be crucial – playing a major role in the mix and pace of developed markets consumption particularly in areas like entertainment and furnishings.

Breaking convention

Ageing populations are typically a big economic headache. As people get older, they have less disposable income to spend (typically, if they retire), while ageing populations discourage investment and government finances get squeezed as dependency ratios go in the wrong direction.

All of that is true, but in a world where populations across the world are both getting older and wealthier, the impact on consumer spending is not so clear cut. If we look across the cuts of US data, in 2024 people aged 65+ accounted for 22% of consumer spending. 10 years ago, in 2014, that share was just 18%. Nominal spending from this cohort has risen by 6.3% per year since 2014, compared to 4.2% for the rest of the US population. Even if their share of spending still undershoots their share of the adult population (~28%), for many categories their spending is a much higher share – notably for (out of pocket) healthcare, utilities and home maintenance. Audio visual equipment and services, reading materials and furniture are also consumed more by older demographics.

While older populations have ‘outperformed’ in terms of spending in recent years, the coming decade points to an even bigger role for the so-called ‘silver dollar’. The combination of rising employment, wealth levels, and the shift in terms of the structure of the population means that real spending in developed markets by over-65s could rise by 4-5% per year compared to closer to 1% for other adults. There is a similar story being seen in China.

This spending growth is likely to be fastest in the areas where it has been rising more quickly in recent years – leisure and entertainment, and home furnishings. This shifting demographic is a key reason for our faith in the continuation of the travel megatrend.

USD100trn
In wealth to be passed down generations

Of course, some of this accumulated wealth won’t be spent – it could be passed down to younger generations and recycled into asset markets, but there is growing evidence of more people wanting to spend down a greater share of retirement savings, potentially due to tax changes, which could give another boost to near-term consumer demand.

This trend may not be enough to offset the various challenges consumers face with rising inflation and ongoing global uncertainty, or the fiscal strains ageing populations bring, but shifting demographics will likely play a big role in shaping the mix of global consumer spending.

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