Affluent Americans are driving U.S. economy and likely delaying need for Fed rate cuts

By Christopher Rugaber, Associated PressThe seal of the Board of Governors of the United States Federal Reserve System is displayed in the ground at the Marriner S. Eccles Federal Reserve Board Building in Washington, Feb. 5, 2018. Once or twice a year, she visits her two adult children in different states.

Older Americans like Harris are fueling a sustained boost to the U.S. economy. Benefiting from outsize gains in the stock and housing markets over the past several years, they are accounting for a larger share of consumer spending — the principal driver of economic growth — than ever before. Federal Reserve Chair Jerome Powell arrives for the plenary session of the International Monetary and Financial Committee meeting, during the World Bank/IMF Spring Meetings at the International Monetary Fund headquarters in Washington, Friday, April 19, 2024.

All told, Americans’ wealth has ballooned from $98 trillion at the end of 2018 to $147 trillion five years later. Adjusting for inflation, the gains are less dramatic, but still substantial. “The baby boomers are the richest retiring generation we’ve ever had,” said Edward Yardeni, president of Yardeni Research. “Not everybody is well-off, but we’ve never had a retiring generation with this much wealth. That’s one of the major reasons why the economy is strong.”

Harris, for one, sees this divide in her own family: Her home and car are paid off, and higher interest rates have had little effect on her finances. She recently visited a home in her neighborhood that she was surprised to see priced at $500,000. She bought hers, which she thinks could fetch a higher price, for $162,000 in 1991.

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