While there has been a decline in women in the workforce, Morgan Stanley predicts that will soon change. Morgan Stanley reports in Millennials, Gen Z and the Coming “Youth Boom” Economy (Link), that “as Gen Z joins Gen Y in the workforce, the two cohorts could deliver a sizable jolt to U.S. GDP, consumption, wages, and housing—and put the U.S. well ahead of its G10 peers.”
It’s well-known that Generation Y, often called the Millennials, will overtake Baby Boomers as the largest cohort in the U.S. this year. Less discussed, but arguably more important: Gen Z, born between 1997 and 2012, will overtake Gen Y as the country’s largest cohort by 2034, ultimately peaking at 78 million. As Gens Y and Z combine in the workforce, these two outsized generations could power higher consumption, wages and housing demand, all pillars of GDP growth.
For the U.S. economy, the demographic tailwinds created by these high-population cohorts could be significant, delivering the kind of “youth jolt” that the Baby Boomers were famous for. However, according to a recent report from Morgan Stanley Research, the implications of these demographic shifts aren’t baked into current Congressional Budget Office forecasts, in particular, the projections for labor-force growth.
Work by the firm’s economic team, along with an in-depth survey of Generation Y and Z consumers, uncovered a significantly brighter outlook for the U.S. in the coming decades than previously thought. As Gens Y and Z combine in the workforce, these two outsized generations could power higher consumption, wages and housing demand, all pillars of GDP growth.
In addition, these new projections on labor-force growth could also mean a rosier outlook for Social Security and Medicare solvency, offering investors an overall bullish view for the U.S. between the 2020s and 2040s—and policymakers a different perspective on the road ahead.