The growing economic power of Generation Z will permanently change the investment landscape over the next ten years, says Bank of America

  • Generation Z’s economic power is growing the fastest in the world, and investors should prepare for tectonic shifts in consumer preferences. Bank of Americasaid a strategist on Thursday.
  • Generation Z revenues are projected to reach $ 33 trillion by 2030, accounting for more than a quarter of total global income. By 2031, the youngest generation will surpass the purchasing power of millennials.
  • Sustainable luxury, e-commerce, new media and online payments companies will benefit from the rise of Generation Z.
  • The tobacco, meat and travel industries will face new pressures as the company moves away from more traditional goods.
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Generation Z is on the verge of disrupting everything from luxury goods to alcohol consumption. Investors should prepare now Bank of America Strategists said on Thursday.

The economic power of the youngest generation is growing fastest in the world. Generation Z – or “zillennials” – incomes will grow by 400% to $ 33 trillion over the next ten years, according to the bank. The cohort – made up of those born after 1996 – will have more than a quarter of global income by 2030 and exceed the purchasing power of millennials the following year.

The rise of the generation will only be strengthened by the cross-generational wealth transfer, said Haim Israel’s team. Baby boomers and members of the silent generation now have household assets of around 78 trillion US dollars and offer the youngest in the world even more purchasing power as they get older.

“The Generation Z revolution begins as the first generation born into an online world is now entering the world of work, forcing other generations to adapt to them, not the other way around,” the team said.

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E-commerce is one of the industries that will benefit from the rise of Generation Z. According to a Bank of America survey, approximately 45% of teenagers in the United States are online “almost all the time”. More than a quarter of Zillennials said their best payment option is their phone, while credit cards didn’t break among the top three.

Legacy media like cable television will lose to online platforms, and more traditional forms of media entertainment will lose market share to esports and streaming services, the team said. Telecommunications providers will benefit from Generation Z treating Internet access as “a necessary utility like water or electricity,” they added.

Gen Z will focus more on ecological and social issues in all areas of life. ESG will get a bigger focus as generation enters the markets, the bank said. Generation Z is the generation with the least likelihood of drawing experiences over goods and appreciating sustainable luxury by weighing quality over price as the main buying factor.

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The takeover of economic power by the group also means the demise of some longstanding trends. According to the bank, more than half of Generation Z say they don’t drink alcohol, compared with a third of millennials. Even the youngest generation is likely to move further away from tobacco and use alternative products like marijuana instead.

More than half of Gen Z’s have some kind of meat restriction that prepares the plant-based meat industry for further growth and at the same time endangers traditional meat producers. Restaurants and grocers are likely to face increased competition from online grocery delivery services and meal sets, the team said.

Banks are challenged by Generation Z’s openness to robo-advisors and mobile-focused investment platforms. Mortgage lenders could come under pressure from a lack of home purchases; Gen Z, or “generation rent,” is the only generation who prefer city life to moving to suburbs or rural areas, the bank said.

Sustainable activism can cut into “harmful” fashion and other goods. Airlines and the hotel industry could be hit by flight shaming and concerns about the environmental costs of travel, according to the bank.

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