Gen X was meant to be the dependable consumer—the reliable generation firmly on the property ladder, preparing to inherit trillions from their boomer and silent generation parents.
And indeed, they are the shoppers whose spending has helped prop up the economy—surprising even the most experienced on Wall Street with how resilient their spending habits could prove to be.
But that’s changing.
It seems the challenge of preparing for a retirement within the next decade or so and continuing to support children is changing their outlook.
And both scenarios—aging and financially supporting offspring—prompts saving. This means the generation relied upon for tapping their cards at the cashier’s desk are instead focusing more on investing.
It’s not a bad thing for the economy, experts say, but it does mark a departure from the norm.
Struggling middle child
Research released by the Bank of America Institute last week revealed spending among Gen X customers was “particularly weak” compared to other generations, prompting analysts to ask if they’re now the economy’s “struggling middle child.”
Their behavior is a marked turnaround from two years ago, when the U.S. Bureau of Economic Analysis found Gen X contributed the largest portion of spending that year.
Joe Wadford, economist at the Bank of America Institute, writes: “As a relatively small generation in number, [Gen X] are often overlooked. However, they play a pivotal role in the U.S. economy.”
He points to data that in 2022, 27% of households in America were headed by a Gen Xer, but they made up 33% of all consumer spending.
But this demographic is now tightening the purse strings and has been pulling back on purchasing since early 2023. Their spending was down 2% year-on-year in August.
Wadford points out that this shift isn’t bad news—unless you’re a business heavily relying on Gen X’s discretionary spend.
“We saw that they were especially slowing down or deferring their discretionary spending,” he told Fortune in a video interview this week.
“Now why is that? We found that it wasn’t necessarily like expense or a cost of living issue because their wages have seen, on average, enough to offset the cost of living increases,” he said. “It’s the fact that they’re just investing and they’re investing a lot. They’re deferring some of that spending.”
The reasoning is clear, his note adds: “Where are Gen X allocating their money? In our view, it’s likely in two places: 1) investing for retirement, and 2) supporting an increasingly dependent young adult population.”
A sign of optimism
Indeed the fact that Gen X is determined to set themselves up to be financially independent in retirement—investing 40% more overall than any other generation—isn’t just “inspiring” for other generations, Wadford added, it’s a “great sign.”
He explained: “When I think about retirement, it’s is the ultimate measure for how I feel the future is going to pan out.
“If I’m investing a lot for retirement, that means that I think that in 10 years things are to be in a position where I can retire. Investments now are the ultimate sign that there is hope for the future.
“It’s definitely something to model yourself after,” he added.
Changing priorities
Phil LeClare is typical of the Gen X consumer Bank of America is referring to. The 53-year-old father-of-four runs his own PR agency in Massachusetts.
LeClare’s children range from the ages of 22 to two and a half, meaning the entrepreneur’s financial priorities range from supporting his college-grad son to planning for his toddler’s future.
Unlike other Gen Xers, LeClare hasn’t got a immovable year in mind for when he’d like to retire—in fact he’d ramp up his work even more if his children needed the financial support.
But in recent years LeClare said his approach to spending has changed.
Despite significant costs this summer such as his wedding in Mexico and honeymoon in Greece, LeClare says his priority is now balancing all of his outgoings with equal savings.
“I am much more keenly aware of what’s being saved and what’s going out now than I ever have at any other point in my life,” LeClare told Fortune.
“I’m not someone who is consumed by money or financial gain. But by the same token as I get older—I’ve lost both parents, my dad most recently a year ago—those things play a big role in changing one’s thinking about their mortality and what they’re leaving behind,” he explained.
“I like to spend money, it’s important to me that the people I love have the things they want, but at this point in my life I look at what I’m investing in and am I using my money to make more money?”
LeClare has worked for himself for the past six years, giving him the freedom to increase or trim his client base as needed. The result is an annual income upwards of $200,000.
Despite his healthy salary, LeClare is conscious not to waste it on material consumables.
“I don’t spend frivolously on things, however I’m much more mindful now of physical and mental health,” LeClare explained. “For example this week I’m going to Florida for a couple of days to get myself back to a point of relaxation.
“Those things I didn’t really think about when I was younger. It was just go, go, go—from a work standpoint and a family standpoint.”
He added: “If I’m spending money I need to be spending [it] on something that is an experience for me or my family. As I’ve gotten older… those things are what’s important to me.”