The Way Old People Spend Is Bad News For The Economy

Household spending peaks at around age 45 for the average American. This is according to Census data analysed by JP Morgan Asset Management.

As you can see in the chart below, spending in most categories begin to decline after age 45.

Future spending needs and habits are important considerations for people planning for retirement.

From an economic and policy standpoint, it’s critically important to understand evolving spending behaviour especially as demographics shift.

The most notable of demographic shifts is the ageing of America’s baby boomers.

We usually hear that the burden of America’s ageing population will come in the form of ballooning entitlement spending like Social Security and Medicare. But this is only part of the story.

As America’s population ages, expect the older end to spend less and less. And don’t forget, consumption accounts for around 70% of GDP.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.