The Economic Impact of Affluent Older Americans on Consumer Spending and Inflation

Retired Engineer Joan Harris Boosts Travel Game Amid Economic Boom

Since retiring two years ago, Joan Harris has been living her best life, jet-setting across the globe and indulging in luxury experiences. The 64-year-old engineer from Albuquerque, New Mexico, has upped her travel game significantly, visiting her adult children in different states and planning trips to exotic destinations like Scotland and a Disney cruise.

Harris, who worked for the federal government for 29 years, attributes her newfound travel freedom to having more disposable income now that she’s no longer saving for her children’s college education. She’s even splurging on first-class plane tickets and higher-level suites on her upcoming adventures.

“I suddenly realized, with my dad getting old and my mom dying, it’s like, ‘No, you can’t take it with you,’” Harris said. “I could become incapacitated to the point where I couldn’t enjoy something like going to Scotland or going on a cruise. So I better do it, right?”

Harris is part of a growing trend of affluent older Americans fueling a sustained boost to the U.S. economy. With outsize gains in the stock and housing markets, this demographic is driving consumer spending to new heights. Their spending on higher-priced services like travel, health care, and entertainment is contributing to inflation but is relatively immune to the Federal Reserve’s efforts to slow growth through higher borrowing rates.

The so-called “wealth effect” is a major factor in the unexpected strength of the economy, as rising home and stock values give people confidence to spend more. This trend has forced the Fed to rethink its plans for interest rate hikes, as inflation remains stubbornly high.

While the economic boom has been a boon for older, wealthier Americans, it has created a divide with younger generations struggling to afford homes and other big-ticket items. The wealth gap is widening, with older Americans owning a disproportionate share of household wealth.

Despite the challenges faced by many older Americans, the overall impact of their spending on the economy is undeniable. As Harris and others like her continue to indulge in luxury experiences and travel adventures, the economic landscape is being reshaped by the spending power of the retiring baby boomer generation.