Will older consumers continue to have strong spending power in the coming year?
- Senior spending in 2023 was driven by a record hike in Social Security
- The 8.7% COLA increase in 2023 boosted spending for older adults
- Next year, the COLA will only be 3.2%, leading to a decrease in spending power
- Bank of America predicts a decline in older generations’ financial health in 2024
- Despite the decrease, older generations will still outperform other age groups in spending
- Baby boomers have significantly more assets than millennials
- Higher prices, not careless spending, are driving the increase in spending
- Many older adults are catching up on postponed medical, dental, and home repair services
Older adults played a significant role in driving consumer spending in 2023, thanks to a record hike in Social Security benefits. The 8.7% cost of living adjustment (COLA) increase provided a boost to spending for the baby boomer and silent generations, who also benefit from pensions. However, the COLA increase for 2024 will only be 3.2%, leading to a decrease in spending power for retirees. Bank of America predicts a decline in older generations’ financial health in the coming year, while younger generations’ expectations remain positive. Despite the decrease, older generations are still expected to outperform other age groups in terms of spending. Baby boomers have significantly more assets than millennials, giving them more financial firepower. It’s important to note that the increase in spending by older adults is largely driven by higher prices, not careless spending. Many older adults are catching up on postponed medical, dental, and home repair services. While the future of senior spending remains uncertain, it is clear that older generations continue to play a significant role in the economy.
Public Companies: Bank of America (BAC)
Private Companies: undefined
Key People: David Tinsley (Bank of America Institute Senior Economist), Mary Johnson (Social Security and Medicare policy analyst with the Senior Citizens League)
Factuality Level: 7
Justification: The article provides information about the increase in Social Security benefits and its impact on consumer spending for older adults. It includes quotes from economists and data from Bank of America. However, there is some opinion presented as fact, such as the statement that older adults are spending out of duress rather than choice.
Noise Level: 6
Justification: The article provides some relevant information about the impact of Social Security cost of living adjustments on consumer spending by older adults. However, it lacks in-depth analysis and fails to explore potential consequences or solutions to the issues raised. The article also includes some repetitive information and does not provide sufficient evidence or data to support its claims.
Financial Relevance: Yes
Financial Markets Impacted: The article discusses the impact of Social Security cost of living adjustments on consumer spending, particularly among older generations. It mentions that the record hike in Social Security in 2023 has driven consumer spending, but the growth is expected to ease in the new year with a lower cost of living adjustment. This information may be relevant to financial markets as it provides insights into the spending patterns and financial health of older consumers.
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article does not mention any extreme events.
