Gen Z is set to become the largest and richest generation in the world over the next 10 years, according to a new report by Bank of America which found that those born between 1997 and 2012 are expected to amass over $74 trillion in income by 2040.

It will be a massive change for a generation that has been struggling with high unemployment, low hiring, and the higher cost of living in recent years and which has been widely forced to set aside the dream of homeownership.

Why It Matters

Gen Z, very much like Millennials, have grown up in a difficult economic environment that has left them struggling to reach what were once considered traditional milestones in their life, including buying a house and building up a family. Almost a third (32 percent) of Gen Zers surveyed by Bank of America said that they felt behind where their parents were at their age in meeting their financial goals.

Unable to save much for these significant achievements, Gen Zers have been known to splurge on holidays and concerts and spoil their pets. According to Bank of America, they are “a generation of spenders”, reporting faster spending growth on necessary and discretionary items than the overall population.

This attitude to spending more will make them “one of the most disruptive generations” to economies around the world, markets, and social systems, the Bank of America report said.

What To Know

After years of COVID-19 lockdowns and economic turmoil, Gen Zers are now facing an increasingly difficult labor market. According to the Bank of America, the number of Gen Z households receiving unemployment grew nearly 32 percent in February compared to a year earlier.

In the same month, unemployment among new entrants to the labor market—which are likely to be overrepresented by Gen Z—was also up 9 percent year-over-year, after having trended upwards since 2023.

The report describes Gen Zers as “overeducated and underemployed.” Among 18- to 21-year-olds who were no longer in high school in 2022, 57 percent of Gen Z were enrolled in a two-year or four-year college, Bank of America reported.

Among Millennials, only 53 percent were enrolled in college at the same age, in 2003, while the number went down to 43 percent among Gen Xers in 1987.

Gen Z’s higher education levels will eventually lead them to higher employment and better-paid jobs, according to researchers who found that, among those who are employed, Gen Z already has a much higher wage growth than any other generation.

Using Bank of America deposit account data, researchers found that wage growth for Gen Z was up nearly 8 percent in February compared to a year earlier—the most among all generations and about twice as high as the overall median.

Gen Z is also likely to benefit enormously from the so-called Great Wealth Transfer that is expected to unfold in the coming years as Baby Boomers pass on their savings and assets to their children and grandchildren. A 2021 report from Cerulli Associates estimated that by 2045 a total of $84 trillion will be passed on from Boomers to Gen X, Millennials, and Gen Z.

BofA researchers estimate that a combination of increased wealth and spending levels over the next 10 years will transform Gen Z into a leading global economic force—a change that they expect to happen relatively quickly.

In 2023, Gen Z had accumulated only $9 trillion in income. Within the next five years, the BofA Global Research said, they will be able to amass $36 trillion in income, while by 2040 they will reach more than double that sum.

What People Are Saying

BofA researchers wrote in the report: “It’s likely they will be among the most disruptive generations to economies, markets, and social systems. Whether it’s due to changing diets or reduced alcohol consumption or saving and housing, Gen Z will redefine what it means to be a U.S. consumer.”

What’s Next

Donald Trump’s policies have sparked a lot of uncertainty around the U.S. economy, including the possibility that the country may enter a recession this year.

An economic downturn is likely to hurt Americans—including Gen Z—in the short term, leading to more layoffs and higher unemployment.