Your grandparents are the main factor keeping the U.S. out of a recession at the moment. However, this situation won't continue indefinitely.

The Complex Impact of an Aging Population on the U.S. Economy

The United States faces a complicated relationship with its growing elderly population. Over the long haul, an aging society poses challenges such as a shrinking workforce, slower economic expansion, and rising expenses for social services.

Yet, at this moment, older Americans are playing a crucial role in preventing the economy from slipping into recession—both through their direct participation and their influence on spending and investment.

The Influence of Older Generations on Jobs and Spending

Consider the current labor market: The Federal Reserve Bank of Richmond reports that in 2025, nearly all new private-sector jobs—97%—were created in health care and social assistance. Similarly, the Bureau of Labor Statistics noted that out of 130,000 jobs added in January 2026, 82,000 were in health care.

Spending patterns also highlight the power of older Americans. Baby boomers, the wealthiest generation to date, hold a staggering 73% of the nation’s wealth, with those aged 70 and above controlling nearly a third, according to Federal Reserve data. This concentration of wealth is fueling major investments, including the surge in AI-related capital expenditures that have driven tech stocks.

Economists told Fortune that affluent boomers are currently steering the economic engine. If their spending falters, the broader economy could quickly feel the effects—a delicate and somewhat precarious situation.

Older Americans: The Economy’s Steadfast Consumers

Financial markets have been consistently impressed by the resilience of U.S. consumers since the pandemic. However, recent trends suggest a widening gap between affluent households and those with lower incomes, a phenomenon often described as a K-shaped recovery.

Mark Zandi, chief economist at Moody’s, believes that without the spending power of wealthy, older Americans, consumer demand would plummet and the country would be at risk of recession. He points out that the top 20% of earners now account for 59% of all consumer spending, and individuals over 50 are responsible for the majority of purchases—a trend that has only grown stronger over time.

“We’ve analyzed spending by income, but similar patterns emerge when looking at age,” Zandi explained to Fortune. “Wealth and income are heavily concentrated among those in their 50s, 60s, and 70s. This creates vulnerabilities, as many boomers with lower or middle incomes are just getting by, and the same concerns about inequality apply to this older demographic.”

Boomers’ Role in Financial Markets

Baby boomers are also a dominant force in the investment world, holding the majority of corporate stocks and mutual funds—about $30 trillion as of the third quarter of 2025, according to Federal Reserve data. Zandi notes that boomers are the primary owners of AI-related stocks and bonds, making them central to the ongoing investment boom in technology.

However, this reliance on boomer wealth comes with risks. David Doyle, head of North America economics at Macquarie, points out that the personal savings rate has dropped sharply—from a pandemic high of 31.8% to just 3.6% by the end of 2025 (below historical norms). This decline likely reflects retirees drawing down their assets, meaning continued spending depends on strong asset prices and positive market sentiment.

“The economy is now more exposed to the risk of a market downturn than it was 15 or 20 years ago,” Doyle told Fortune. He warned that if both stocks and bonds were to fall simultaneously, as happened between 2020 and 2022, it could significantly reduce boomer spending.

Inflation is another threat. Unlike those still earning wages, retirees’ investment returns are not directly linked to inflation, making them more vulnerable to rising prices. “If you’re retired, you don’t have a paycheck to offset inflation shocks,” Doyle cautioned. “This could start to work against boomer spending.”

The Aging Population and the Labor Market

Older Americans are also driving demand for new jobs, especially in health care. The sector has seen the largest share of job openings recently, a trend that economists attribute to increasing care needs as the population ages. Medical professionals told Fortune that the industry is working hard to train specialists to meet these demands.

This challenge is intensified by declining net immigration, as shown by Census Bureau data, even though the health care sector relies heavily on immigrant workers. A Baker Institute study found that the proportion of foreign-born health care workers rose from 14.22% to 16.52% between 2007 and 2021, while the overall foreign-born population increased only slightly.

Looking ahead, more than 30 million Americans will reach age 65 by 2030, a milestone often associated with retirement. While older adults are currently supporting demand in a sluggish job market, the future will bring a smaller labor force to fill roles as other sectors regain momentum.

This demographic shift is expected to slow economic growth. The Stanford Institute for Economic Policy estimated that a 10% rise in the share of people over 60 leads to a 5.7% drop in GDP per capita.

“I think of it in terms of demand and supply,” Zandi said. “The aging population is boosting demand, especially in health care, which is helping us avoid a recession in the short term. But on the supply side, it’s becoming a growing obstacle to long-term growth, affecting both the labor force and productivity. While the immediate effects are positive, the long-term impact is a significant drag on the economy.”

Zandi added that the workforce won’t shrink overnight; rather, the decline will be gradual. He suggested that changes in immigration policy and advances in AI could help ease the transition.

“At some point, immigration policy will likely shift as the need for workers becomes more apparent,” Zandi predicted.

Similarly, productivity gains from AI could help balance the effects of an aging workforce. Doyle agreed, saying, “Some worry about a surge in unemployment, but I’m not convinced. Job growth will likely shift to new areas. It’s easy to see what’s being lost, but harder to imagine the new opportunities that will emerge as the economy adapts.”

This article was originally published on Fortune.com.