Prospect of bigger spending seniors could lessen impact on economy: report
A new Bank of Montreal report suggests the economy may not be suffering as much as feared from the aging of the baby boom generation.
The paper argues that while it is true that seniors spend less, there is evidence that today's retirees are bigger spenders than previous generations.
If consumption levels of seniors stays the same, the impact on the economy would amount to about 0.2 percentage points by 2033, and the drag on consumption would total about 4.6 per cent.
These are not insignificant levels.
But senior economist Sal Guatieri notes that in the last ten years seniors have become bigger spenders, so much so that if the trend holds, the negative economic drag on consumption would disappear.
Regardless, Guatieri says seniors will become the most powerful spending group in the economy over the next two decades through sheer weight of numbers alone.