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The idea that baby boomers have staggering amounts of wealth has become widely accepted in the US. While this notion is not entirely inaccurate, digging deeper into the data shows a slightly different story.
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Meredith Whitney, CEO of Meredith Whitney Advisory Group, said in an interview on Bloomberg Television in May that baby boomers are among the consumer cohorts that are struggling after COVID-19 stimulus checks “dried up.”
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Whitney was dubbed “The Oracle of Wall Street” by Bloomberg for predicting the 2008 financial crisis.
“After-tax earnings in the year after consumer stimulus checks ended were down on average 18%, right, because COVID was non-tax,” Whitney told Bloomberg. “You’ve seen home equity rise at a faster clip than credit card lending, so people are tapping into the equity in their homes. And it’s seniors, right? So 44% of home equity is taken out by seniors, which is counterintuitive—it’s crazy, right?”
Whitney talked about different cohorts among baby boomers to highlight the unequal distribution of wealth.
“Everyone thinks the boomers have all this money, but that’s a small portion. Seniors are living paycheck to paycheck,” she said.
Data shows that baby boomers account for nearly 52% of the country’s total wealth, worth $78.55 trillion.
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Whitney also discussed how affordability challenges facing baby boomers are impacting the housing market. She said seniors are staying in their existing homes longer because they cannot afford to move out.
“Only 1 in 10 seniors can afford assisted living,” Whitney said. “This is one of the problems with housing inventory, they’re staying in their houses longer because they can’t afford to move out.”
Talking about changes in consumer sentiment, Whitney said that at the start of the recent earnings season, major banks reported that the consumer was “fine.” However, restaurant earnings indicated a decline in foot traffic from low-income consumers, while Walmart’s (NYSE:WMT) retail data showed that its business is now largely driven by higher-income shoppers, she said.
