Independent Financial Research & Analysis
Daily briefings, 7,600+ real-time charts, and macro insights from Dr. Ed Yardeni and his research team.
Research
Latest Research
Recent insights from our research team
Baby Boom Briefing
Consumer spending resilience increasingly has become a balance-sheet story rather than an income-statement story. The personal saving rate has been falling since January 2024 as consumer outlays have outpaced disposable personal income (chart). Many economists believe that this is unsustainable. Not us. We think that the saving rate will turn negative by the end of the decade as retiring Baby Boomers finance their spending with their sizeable net worth. Indeed, there is a clear inverse correlation between the personal saving rate and the ratio of household net worth to disposable personal income (DPI). As household net worth increases relative to DPI, consumers tend to save less of their DPI. Inflation-adjusted consumer spending rose at a 3.2% annualized rate in Q2, the strongest pace since Q3-2025, even as real disposable personal income fell at a 1.5% annualized rate, the largest decline since Q2-2022. On a monthly basis, the former has been rising. If current trends continue, inflation-adjusted consumer spending will exceed total disposable income by 2030 (chart). In this scenario, the personal saving rate would turn negative. This prospect is already prompting the economy’s naysayers to say a negative personal saving rate isn’t sustainable. They conclude that diminishing savings will force consumers to retrench. However, there are no compelling signs yet that America’s shoppers are about to slow down. August's retail sales report showed a strong rebound in consumer spending, beating consensus expectations and erasing July's pullback. Many of the major components of retail sales rose to record highs in August (chart). So what helps explain consumers' ongoing strength? A closer look at Baby Boomers' balance sheets provides the answer. Consider the following: (1) Almost all Baby Boomers are seniors. After World War II, 76 million Baby Boomers were born between 1946 and 1964 (chart). They are currently 62 to 80 years old. They will all be seniors (aged 65 and older) by the end of the decade in 2029. As a result, the number of households headed by a senior rose to a record 39.3 million last year, the largest of all the other age cohorts (chart). Households headed by a senior now account for almost a third of all households (chart). (2) They have most of the wealth. Baby Boomers own an extraordinary share of total household net worth. As of Q2-2026, they held $97.4 trillion of net worth, or a bit more than half of the total (chart). The Silent Generation held another $19.8 trillion, much of which will eventually pass to Boomer households. Together, the total is $117.2 trillion, making the senior cohort the wealthiest in world history! To be exact, Baby Boomers currently account for 53.0% of total US household net worth (chart). Together with the Silent Generation, they account for 64.0% of household net worth. (3) They hold lots of assets. Baby Boomers also own a disproportionate share of the assets that have appreciated in value, such as stocks and real estate. They hold $35.2 trillion, or 55.0%, of household corporate equities and mutual fund shares (charts). Baby Boomers also own $20.6 trillion, or 41.0%, of all household real estate wealth, the largest share of any generation (charts). In other words, Baby Boomers are heavily exposed to the assets that have generated some of the most positive wealth effects on consumption in recent years. (4) They are less sensitive to higher interest rates. Higher interest rates are bad news for young households. For most Baby Boomers, however, they are a boon. Baby Boomers currently hold roughly $9.6 trillion in deposits and money market funds (chart). The Silent Generation holds another $2.3 trillion. Higher short-term interest rates have boosted interest income for many older households. (5) They've paid down much of their debt. They've reduced their debt burdens. Baby Boomers account for only 21.0% of total household liabilities, down from 58.0% in 1990 (chart). Disaggregating these liabilities reveals that the Baby Boomers account for 20.0% of consumer credit and 18.0% of household mortgage loans (charts). Both of these percentages have declined sharply in recent years. Many Baby Boomers either paid off their mortgages or locked in historically low mortgage rates during the pandemic. As a result, many have little incentive to sell their homes or downsize in retirement. By staying put, they limit the supply of existing homes for sale, boosting house prices and increasing their homeowners' equity (chart)! The important point is that higher interest rates are not experienced the same way across generations. For younger households, higher rates are mostly a borrowing cost. For many older households, higher rates can also be a source of income, while locked-in low-rate mortgages and limited debt exposure reduce the drag from tighter credit conditions. (6) They are less dependent on the labor market. Unlike younger households, many Baby Boomers are already retired or approaching retirement, so their spending decisions are less directly tied to monthly changes in wage growth, hiring conditions, or job security. Some may be indirectly affected if their adult children struggle to find jobs or earn enough income to support themselves. However, Baby Boomers' overall financial position is increasingly tied to their balance sheets rather than their paychecks. Taken together, these factors put Baby Boomers in a unique position to keep spending. They hold much of the wealth, benefit from higher interest rates, and depend less on the labor market than younger generations. In other words, they will remain an important driver of consumer spending for years to come.
On RVs, Drought & Crypto Regs
Economic conditions have dealt RV makers a tough hand, with high oil prices and interest rates discouraging RV sales and high input prices squeezing profit margins at the same time. Today, Jackie looks at the business decisions Thor Industries management has made in response to these challenges. … Also: The drought in western US states has gotten so bad that it threatens electricity production at the hydroelectric plants in the dams that created Lakes Mead and Powell, and the government has imposed a water conservation plan. … And: A look at the Trump administration’s crypto-promoting regulations.
Booming Economy Pushes Bond Yields Higher
Bond yields have risen for many reasons this year (chart). The war in the Middle East and the war between Russia and Ukraine have pushed up crude oil and refined petroleum product prices. Rising interest rates in Japan are forcing hedge funds to unwind their carry trades. They are paying back their yen loans by selling the higher-yielding government bonds of the US and other countries that they purchased with the proceeds. The surge in the supply of AI-related corporate bonds and the widening US federal budget deficit have also been cited as explanations for the bear market in bonds. Today, however, the main reason that bond yields rose sharply is that the US economy is booming. Purchasing managers' indexes typically are not huge market movers, but this morning's readings from S&P Global caught the market by surprise. The services PMI jumped to 58.7 in September, its highest level in nearly five years, from 56.5 in August. Its manufacturing counterpart soared to 57.0, a level not seen in more than four years (chart). September's regional business surveys from the New York and Philadelphia Feds confirmed the S&P Global manufacturing data and suggest that the national ISM M-PMI also rose sharply in September (chart). This suggests that the economy's increasing strength this year may be one of the more important explanations for the rise in bond yields. In combination with the inflationary impact of the wars mentioned above, the Fed has been forced to pivot from thinking about more rate cuts at the beginning of this year to a rate hike in September, with another one or two hikes likely before the end of this year. Interestingly, most of this year's increase in the 10-year Treasury bond yield is attributable to the comparable Treasury Inflation-Protected Securities (chart). The former rose 94bps, while the latter rose 84bps. The spread between the two is widely used as a proxy for the 10-year expected inflation rate. It has been range-bound between 2.0% and 2.5% since 2022. Since 2023, the TIPS yield has closely tracked the Weekly Economic Index compiled by the Federal Reserve Bank of New York as a weekly indicator of real GDP growth on a y/y basis (chart). We expected the 10-year bond yield to remain in the 4.00%-5.00% range this year. We aren't giving up on that range just yet; it mirrors the range during the five years before the Great Financial Crisis (chart). Nevertheless, the risks now clearly point to more upside in yields. A relief rally in bond prices would probably require a resolution of the war in the Middle East that would lower oil prices. Another possibility is that US Treasury Secretary Scott Bessent will act to bring bond yields down by buying back more Treasury bonds and issuing more Treasury bills. As a result of today's news, the federal funds futures market is now predicting three to four 25bps rate hikes over the next 12 months (chart). Two of them are expected within the next six months. The 2-year US Treasury note yield is predicting four rate hikes over the next 12-24 months (chart). So far, the bond yield remains below the growth rate of nominal GDP, which was 6.6% y/y during Q2-2024 and will probably be even higher during Q3-2024 (chart). In the past, especially during the 1980s, the Bond Vigilantes pushed the bond yield above nominal GDP to slow the economy. They haven't done that so far. The risk is that they will do that if the Fed fails to subdue inflation. And what about the federal deficit and debt? Better-than-expected economic growth might help to reduce the federal deficit by boosting tax revenues. However, higher interest rates will increase the debt's net interest costs. The only somewhat comforting development is that the rise in the federal debt relative to GDP since 2009 from about 25% to 100% currently has been partially offset by a drop in private nonfinancial private debt relative to GDP from 200% to 166% over the same period (chart).
Archive
Our Research Library
19 years of daily research, charts, and analysis
Topics
QuickTakes Topics
Timely commentary covering the most important market themes
Charts
Find Any Chart in Seconds
Search across 7,689+ real-time charts with instant visual previews
ORACLE: FORWARD OPERATING EARNINGS PER SHARE
S&P 500 MATERIALS SECTOR & INDUSTRIES: ANNUAL EARNING GROWTH FORECAST
NIKE: FORWARD P/E
S&P 500 UTILITIES SECTOR & INDUSTRIES: ANNUAL EARNING GROWTH FORECAST
Sample charts from our collection of 7,689+ visualizations
Tools
Research Tools
Interactive dashboards for tracking economic conditions and market trends
Beige Book Monitor
Fed economic conditions across 12 districts with traffic-light signals.
FOMC Policy Meter
Dovish-to-hawkish policy stance tracker across FOMC meetings.
FOMC Minutes Monitor
Hawk/dove signal extraction across 10 economic themes.
FOMC SEP Monitor
Fed projections and dot plot distributions across meetings.
FOMC Statements
Every FOMC policy statement since 1997 — full text, rates, and voting records.
Private Credit Monitor
Auto-updating chronology of the private credit liquidity crisis.
Release Calendar
Major publications from the Fed, ECB, IMF, and 12 global institutions.
Try Yardeni Research free for four weeks.
Full access to everything we publish. No credit card, no obligation.