A new report from Bank of America reveals that Gen Z, those born between 1997 and 2012, is on track to become the largest and wealthiest generation in the world within the next decade. By 2040, this generation is expected to accumulate over $74 trillion in income.
This shift marks a dramatic turn for a generation that has faced high unemployment, limited job opportunities, and rising living costs in recent years. As a result, many Gen Zers have had to abandon the dream of homeownership.
Why It Matters
Like Millennials, Gen Z has grown up in a challenging economic landscape, making it difficult to achieve traditional life milestones such as buying a home or starting a family. According to Bank of America, nearly a third (32%) of Gen Zers feel they are falling behind their parents at the same age when it comes to reaching financial goals.
With limited ability to save for big life events, Gen Z is more inclined to spend on experiences like vacations, concerts, and pampering their pets. Bank of America describes them as “a generation of spenders,” noting that their spending growth on both essential and discretionary items is faster than the general population.
The Bank of America report predicts that Gen Z’s spending habits will make them “one of the most disruptive generations” to global economies, markets, and social systems.
What to Know
After enduring years of COVID-19 lockdowns and economic instability, Gen Z is now grappling with a tough labor market. The Bank of America report reveals that the number of Gen Z households receiving unemployment benefits grew by nearly 32% in February compared to the previous year.
Unemployment among new entrants to the workforce, a group likely to be dominated by Gen Z, also rose by 9% year-over-year in February. This increase has been trending upward since 2023.
The report highlights that Gen Z is “overeducated and underemployed.” Among 18- to 21-year-olds who were no longer in high school in 2022, 57% were enrolled in two-year or four-year colleges, according to Bank of America.
In comparison, only 53% of Millennials were enrolled in college at the same age in 2003, while just 43% of Gen Xers were in college in 1987.
Researchers suggest that Gen Z’s higher education levels will eventually result in better job opportunities and higher salaries. In fact, among those who are employed, Gen Z already experiences significantly higher wage growth than any other generation.
According to Bank of America deposit account data, researchers discovered that Gen Z’s wage growth increased by nearly 8% in February compared to the previous year. This is the highest growth rate among all generations, approximately double the overall median.
Gen Z is poised to benefit significantly from the upcoming “Great Wealth Transfer,” where Baby Boomers are expected to pass down their savings and assets to their children and grandchildren. A 2021 report by Cerulli Associates predicted that by 2045, $84 trillion will be transferred from Boomers to Gen X, Millennials, and Gen Z.
Bank of America researchers project that the combination of increased wealth and higher spending over the next decade will position Gen Z as a leading global economic force—a transformation they expect to unfold rapidly.
In 2023, Gen Z had accumulated $9 trillion in income. According to BofA Global Research, this figure is set to surge to $36 trillion within the next five years, with Gen Z surpassing $74 trillion by 2040.
What People Are Saying
BofA researchers noted in the report: “It’s likely they will be among the most disruptive generations to economies, markets, and social systems. Whether it’s through changing diets, reduced alcohol consumption, or shifts in saving and housing, Gen Z will redefine what it means to be a U.S. consumer.”
What’s Next
Donald Trump’s policies have created significant uncertainty regarding the U.S. economy, with concerns that the country may face a recession this year.
If an economic downturn occurs, it could negatively impact Americans—including Gen Z—leading to more layoffs and higher unemployment in the short term.
