Why Baby Boomers and Gen Z have different economic concerns

Over the past few months, Baby Boomers’ confidence in the economy has continued its slow march downward, while Gen Z’s has stayed elevated. That’s according to the most recent consumer confidence data from The Conference Board.

The main driver of this trend: 20-year-olds and 70-year-olds are just worried about different things.

The more pessimistic groups are “very concerned about what’s happening with healthcare. And they’re also very concerned with things like retirement, or, if they are retired, how well are their benefits going to be doing,” said Tom Arnold, who teaches finance at the University of Richmond.

He said young people worry about labor and credit, or their ability to make and spend money.

“The only time that the younger generation really, really gets pessimistic is if there aren’t any jobs. But unemployment’s at a relative low,” he said.

The job market and credit environment aren’t all that worrisome right now, while healthcare costs keep rising. Hence, the sentiment gap.

The gap is also especially wide in The Conference Board survey because it focuses on the labor market.

“They put a lot of weight on the questions which are about wages or expected wage growth, things like that,” said Camelia Kuhnen, who teaches household finance and labor at the University of North Carolina. So younger workers appear especially optimistic in this survey, because they see higher wage growth year-to-year than older people, Kuhnen said.

The confidence gap between younger and older generations isn’t new, and it’s not unique to times when the labor market is strong. No matter how rough the economy gets, younger people have what economists call the long-term hedge.

“Some of that optimism can also come from, ‘I’m young, I can build up these skills, I can succeed in this economy.’ And you can get optimism in that sense,” said Tyler Schipper, who teaches data analytics and economics at the University of St. Thomas.

If the economy is bad, a 20-year-old has time to adapt to major market disruptions. Today, that includes the introduction of artificial intelligence, for example.

“They also feel more likely that their employers are going to invest in them,” Schipper said.

That long-term hedge also cushions worry even when the economy looks bad. Because the younger you are, the more working years you have left for the economy to turn around.