Market strategist Ed Yardeni’s “G-shaped economy” explains a puzzle that has confounded economists for two years: why consumer spending keeps rising even as Americans’ disposable income has flattened. The “G” stands for “generational,” and Yardeni’s theory centers on baby boomers—who collectively hold about $89 trillion in net worth—retiring in historic numbers and drawing down their accumulated wealth to support not only their own spending but also their adult children and grandchildren.
The traditional K-shaped economy model, which dominated economic thinking after the pandemic, suggested that the wealthiest households were driving all consumer spending while lower- and middle-income Americans struggled. But Yardeni argues this misses a critical mechanism: as baby boomers leave the workforce, they stop earning paychecks, which depresses average disposable income. Yet they continue spending—and in many cases, actively supporting younger relatives—by tapping into decades of accumulated assets.
In 2025 alone, 1.85 million additional retired workers filed for Social Security for the first time, pushing the total number of retired workers receiving benefits to a record 53.6 million, according to Yardeni’s analysis. That retirement wave is weighing on national income statistics because retiring boomers typically earned more than younger workers. “As they retire, guess what? They’re not getting the paycheck anymore,” Yardeni explained. But their $89 trillion in net worth—built through home appreciation, stock market gains, pensions, and decades of saving—continues to fuel spending.
The intergenerational support flowing from older to younger Americans is substantial and often invisible in official statistics. According to Mauldin Economics, nearly one in five adults ages 25 to 34 are now living in a parent’s home—a share that has more than doubled since 1980 and has returned to levels not seen since before World War II. Many are there not by choice but because housing and living costs have become unaffordable on their own incomes.
When a boomer parent covers a child’s rent, helps with a grandchild’s education, or allows an adult child to live rent-free, that money does not disappear from the economy. It flows directly into consumption—groceries, utilities, entertainment, and other spending that gets counted in official consumer spending data. The boomer’s balance sheet becomes the younger generation’s spending power. “It’s an intergenerational wealth transfer that standard economic models miss because they measure income, not assets,” according to Mauldin Economics analysis of Yardeni’s framework.
This mechanism helps explain why consumer spending has remained resilient even as real disposable income—the income data economists typically track—has stalled. In April 2026 alone, disposable personal income fell while consumer spending rose, a divergence that bears predicted could not last. Instead, Yardeni’s G-shaped model suggests it can persist as long as boomers’ accumulated wealth remains available to draw down.
The Limits of the Theory
Yardeni emphasizes that the G-shaped economy is not a permanent solution to the affordability crisis facing younger Americans. “It would be much better if we didn’t have an affordability crisis,” he stated. The wealth supporting this spending is finite and concentrated among the wealthiest older Americans. The bottom 50% of Americans hold roughly $9 trillion in assets, while the top 10% hold well over $100 trillion—a gap that means most boomers cannot sustain the level of support younger generations need indefinitely.
Moreover, a portfolio is not a paycheck. As baby boomers continue to age and eventually pass wealth to their heirs, the rate at which they can draw down assets will slow. When that happens, the consumption engine that has kept the U.S. economy resilient despite weak income data will lose fuel. The G-shaped economy, in Yardeni’s view, buys time—but it does not resolve the underlying affordability crisis or income inequality that defines the American economy today.
Sources
- Yardeni Research — Ed Yardeni’s analysis of baby boomer retirement, Social Security data, and the G-shaped economy framework
- Mauldin Economics — John Mauldin’s recap of Yardeni’s presentation at the 2026 Strategic Investment Conference, including boomer wealth figures and intergenerational support data
- Yahoo Finance / Moneywise — Explanation of the G-shaped economy concept, boomer wealth holdings, and comparison to the K-shaped model
- Pew Research Center — Data on young adults living with parents and historical trends
- Federal Reserve — Wealth distribution data between top 10% and bottom 50% of Americans
