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While many members of Generation Z struggle with an uncertain job market, unsustainable housing costs, and rising living expenses, they could soon lead the global economy. A phenomenon known as the “Great Wealth Transfer” could transform their financial outlook within a decade.
A meteoric rise in 10 years. A recent Bank of America report examines the future of Gen Z, which currently faces a negative financial balance due to high housing and education costs and low starting salaries.
According to the report, this generation already controls about $9 trillion in income globally, just two years after entering the labor market. However, the bank expects this figure to rise to $36 trillion by 2030 and $74 trillion by 2040, in a shift experts call the “Great Wealth Transfer.”
Challenging early years. The report notes that Generation Z will face a tough start in the workforce. Fresh out of college, many young people encounter a labor market and dynamics they don’t fully understand, even though they’re often overqualified for available jobs.
The integration of AI systems into the workplace will also pose challenges in the early years. The Bank of America report highlights that this generation will face a cooling job market. The situation is concerning because, according to Fortune, Generation Z considers $587,797 as a satisfactory income, compared to $180,865 for millennials, $212,321 for Generation X and $99,874 for boomers.
The generational money relay. Despite these difficult beginnings, the report suggests that Generation Z will experience exponential growth, becoming the richest and largest generation by 2035. By that year, this generation will make up 30% of the global population.
This “Great Wealth Transfer” represents a massive shift of capital from older generations to Gen Z, marking a turning point in global economic distribution. Bank of America’s estimates align with a 2022 report by consulting firm Cerulli Associates, which predicted a wealth transfer of about $84 trillion from boomers to millennials and Gen Z by 2045.
Additionally, a study by insurer Northwestern Mutual found that 38% of Gen Z in the U.S. expect to receive an inheritance, further boosting their economic power.
They’re not accustomed to saving. Just as Generation Z has reshaped the labor market, they’ll also redefine how they spend and invest the wealth transferred to them. In their current financial climate, saving is often not an option, so their spending is expected to outpace that of older demographic groups like boomers, who are known for their saving habits.
Brands are rubbing their hands in anticipation. Bank of America predicts that Gen Z’s global spending will reach $12.6 trillion by 2030, up from $2.7 trillion in 2024.
“They will be among the most disruptive generations to economies, markets and social systems. Whether it’s due to changing diets, reduced alcohol consumption or saving and housing, Gen Z will redefine what it means to be a U.S. consumer,” the authors of the Bank of America report said.
Related | Gen Z Is Back in the Office With a New Anti-Stress Strategy: Pretending to Be Too Busy
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