Gen Z's surging economic power will permanently change the investing landscape over the next decade, Bank of America says
- Generation Z's economic power is the fastest-growing around the world, and investors should start preparing for tectonic shifts in consumer preferences, Bank of America strategists said Thursday.
- Gen Z's earnings are set to hit $33 trillion by 2030 and account for more than a quarter of all global income. By 2031, the youngest generation will surpass millennials' spending power.
- Sustainable luxury, e-commerce, new media, and online-payment businesses are set to benefit from
Gen Z's ascendance.
- The tobacco, meat, and travel industries will face new pressures as the group turns away from more traditional goods.
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The youngest generation's economic power is the fastest-growing around the world. Gen Z's — or "zillennials'" — income is set to grow 400% over the next decade to $33 trillion, according to the bank. The cohort — made up of those born after 1996 — will hold more than a quarter of global income by 2030 and surpass millennials' spending power the year after.The generation's ascendance will be augmented further by generational wealth transfer, the team led by
Read more: 'I still think there's a long way to go': A crypto CEO breaks down why he's bullish on Bitcoin even after its surge back to $18,000 — and shares the other cryptocurrency he thinks is here to stayE-commerce is among the industries poised to benefit from the rise of Gen Z. Roughly 45% of US teens in a
Old media such as cable TV will lose out to online platforms, and more traditional forms of media entertainment will lose market share to esports and streaming services, the team said. Telecom service providers will benefit from Gen Z treating internet access "as necessary a utility as water or electricity," it added.Gen Z will focus more on environmental and social causes across all facets of life. Environmental, social, and corporate-governance factors will garner a larger focus as the generation moves into the
The group's takeover of economic power also spells doom for some long-standing trends. More than half of Gen Z members said they did not drink alcohol, compared with one-third of millennials, according to the bank. The youngest generation is also likely to shift further away from tobacco and instead take up alternative products including marijuana.
More than half of the 14,000 Gen Z members in a Bank of America survey said they had a type of meat restriction, setting up the plant-based-meat industry for further growth, while endangering traditional meat producers. Restaurants and grocers will likely face increased competition from online food delivery and meal-kit businesses, the team said.Banks will be challenged by Gen Z's openness to robo-advisors and mobile-focused investing platforms. Mortgage lenders could face pressure from a lack of homebuying; Gen Z, or "generation rent," is the only generation to prefer city living over moving to suburbs or rural areas, the bank said.
Sustainable activism can cut into "harmful" fashion and other goods. The airline and hotel industries could be hit by "flight shaming" and concerns around the ecological costs of travel, according to the bank.
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