According to research, Gen Z have an estimated purchasing power of $140 billion, versus Millennials with a purchasing power of $2.5 trillion. Regarding population, as of July 2019, there were about 67,170,000 Gen Zers, 72,120,000Millennials, 65,170,000Gen Xers, 69,560,000Baby Boomers, 20,870,000 individuals in the Silent Generation, and an estimated 1,700,000 Americans in the greatest Generation.
1. U.S. GENERATIONAL SPENDING IN 2019
- According to Business 2 Community, Gen Z, aged 23 and below have an estimated spending power of about $44 billion annually.
- Millennials are said to have an annual spending power of approximately $322.5 billion.
- Gen X, on the other hand, have an annual spending power of $357 billion.
- Baby Boomers spend a total of about $548.1 billion annually.
- Equally, the Silent Generation, (ages 76 years and older) is said to have spent about $162.9 billion in 2019.
- Provided below is a graphic showing the breakdown of the average total transactions per generation and the average spend per transaction.
Gen Z Allocation of Annual Spending
- In comparison to the other generations, in 2019, Gen Z’s core expenditure allocations included 32.4% on housing, 21.1% on transportation, and 14.9% on food.
- Other major expenditures include 8.5% share on personal insurance & pensions, 7.6% on education, 3.8% on healthcare, 3.6% on apparel & services, and 3.5% on entertainment.
- Equally, this cohort spent the least on personal care products & services at 1.2% share, cash contributions at 1.1%, miscellaneous 0.8%, alcohol beverages 0.8%, tobacco products & smoking supplies at 0.5%, and reading at 0.1%.
2. PROJECTED SPEND PER GENERATION 2025 & 2030
- According to the Congressional Budget Office, the real consumer spending index on goods and services will likely remain robust in 2020 and expand by 2.5% compared to 2.7% growth in 2019.
- The CBO projects that from 2021 to 2024, the average annual growth in consumer spending index will decline to 1.9%. However, from 2025 to 2030, the growth is expected to hold steady at 1.9%.
- Using the future value formula, the projected U.S. consumer spend per generation can be determined as follows FV = PV (1 + r)^n, whereby
- FV — Future value
- PV — Present value
- r — Rate of return
- n — No. of periods
- Gen Z: $44 billion (1 + 0.019)^5 = $48.34 billion
- Millennials: $322.5 billion (1 + 0.019)^5 = $354.32 billion
- Gen X: $357 billion (1 + 0.019)^5 = $392.23 billion
- Baby Boomers: $548.1 billion (1 + 0.019)^5 = $602.2 billion.
- Silent Generation: $162.9 billion (1 + 0.019)^5 = $179 billion
- Gen Z: $44 billion (1 + 0.019)^10 = $53.11 billion
- Millennials: $322.5 billion (1 + 0.019)^ 10 = $389.3 billion
- Gen X: $357 billion (1 + 0.019)^10 = $430.93 billion
- Baby Boomers: $548.1 billion (1 + 0.019)^ 10 = $661.61 billion.
- Silent Generation: $162.9 billion (1 + 0.019)^ 10 = $196.64 billion
3. U.S. PURCHASING POWER PER GENERATION
A review of numerous business and economics reports, including government & industry publications and surveys show that the U.S. generations exhibit varying purchasing powers.
- Lexington Law notes that Baby Boomers have an estimated purchasing power of $2.6 trillion.
- Millennials on the other hand have a purchasing power of $2.5 trillion.
- Likewise, Gen X have an estimated purchasing power of $2.4 trillion.
- In 2020, the purchasing power of Gen Z is expected to reach $140 billion.
Purchasing Power of Gen Z and Millennials
- The older end of the Gen Z age range comprises the segment of this cohort with the real purchasing power, i.e., $143 billion in buying ability; however, this demographic can influence up to $665 billion in family spending. Millennials on the other end have a purchasing power estimated at $2.5 trillion.
- Gen Z is expected to account for approximately 40% of all consumer markets in 2020. Despite having a small purchasing power, when considering their influence on parent and home purchases, their real purchasing power jumps closer to $200 billion.
- An estimated 75% of Gen Z spends over half of the money available to them monthly. This cohort is also very persuasive within their families, and capable of influencing 70% of family food purchase decisions and 80-90% of other purchased items.
- Gen Z’s massive spending power seems to focus more on “eating out, electronics, beauty products, and clothing/accessories.” Gen Z in college spend more than $1,330 per household on back to school items, which reached $25 billion in 2018.
- According to the most recent Ellie Mae Millennial Tracker — the percentage of all Millennials’ purchase loans closed during May grew for the second consecutive month, reaching 56% in June, an increase by nine percentage points from May, and marks the highest purchase share since March 2020.
- In Q2 of 2020, Millennials closed many purchase loans than any other generation. This demographic is anticipated to drive the purchase market over the next few years. Analysts expects that 2020 marks the onset of the Millennials boom in purchasing power as many reach the homebuying age and are expected to drive purchase transactions in 2021 through 2023.
- The graphic below shows the annual dollars each generation spends on specific categories.
- Experts predict that by 2030, the collective annual income of Millennials globally will exceed $4 trillion. Likewise, research shows that Millennial consumers are often willing to pay more for popular items that offer unique experiences.
- In a Charles Schwab survey, it was found that about 60% of Millennials agreed they would purchase a cup of coffee priced at over $4, versus just 29% of baby boomers. Further, 79% of Millennials indicated they would spend more money to eat a popular restaurant.
4. CURRENT U.S. POPULATION PER SEGMENT
The current U.S. population broken down by segment
- Gen Z — 67,170,000
- Millennials — 72,120,000
- Gen X — 65,170,000
- Baby Boomers — 69,560,000
- The Silent Generation — 20,870,000
- The greatest Generation — 1,700,000
- The total population in 2019; therefore, is 296,590,000 people.
Projected Population by Segment in 2025
According to the PEW Research Center, from 2005 to 2050, the U.S. population is expected to grow at an annual rate of 0.9% during the foe=recast period. With this growth rate, the U.S. population in 2025 by generation can be estimated using the future formula shared above
- Gen Z: 67,170,000 (1 + 0.9%)^6 = 70,879,778
- Millennials: 72,120,000 (1 + 0.9%)^6 = 76,103,164
- Gen X: 65,170,000 (1 + 0.9%)^6 = 68,769,318
- Baby Boomers: 69,560,000 (1 + 0.9%)^6 = 73,401,776
- Silent Generation: 20,870,000 (1 + 0.9%)^6 = 22,022,643
- The Greatest Generation — 1,700,000 (1 + 0.9%)^6 = 1,793,890
In this regard, by 2025, the U.S. population would reach about 312,970,569 people
Projected Population by Segment in 2030
The figures provided are approximates based on the current U.S. population multiplied by the annual growth rate of the population.
- Gen Z: 67,170,000 (1 + 0.9%)^11 = 74,127,299
- Millennials: 72,120,000 (1 + 0.9%)^11 = 79,590,008
- Gen X: 65,170,000 (1 + 0.9%)^11 = 71,920,144
- Baby Boomers: 69,560,000 (1 + 0.9%)^11 = 76,764,849
- Silent Generation: 20,870,000 (1 + 0.9%)^11 = 23,031,662
- The Greatest Generation: 1,700,000 (1 + 0.9%)^11 = 1,876,082
In this regard, the U.S. population is anticipated to reach approximately 327,310,044 people.