September 2, 2026

The G-Shaped Economy

Boomers hold $90 trillion, higher rates pay them interest, and their kids can't buy the houses they won't sell. Meanwhile the retirement system that's supposed to catch everyone has a date on it: the last quarter of 2032.

The facts:

• Baby boomers now hold nearly $90 trillion, about 52% of all US household wealth, including 54% of household stocks and 41% of all real estate; Ed Yardeni calls the result a "G-shaped economy," where spending is increasingly funded by accumulated wealth instead of wages (Fortune)
• Boomers hold about $3.1 trillion in money-market funds, roughly 60% of the household total, so higher interest rates are income to them while pricing their kids out of mortgages; older owners with locked-in low rates aren't selling, which keeps home supply tight and prices up (Fortune)
• A quarter of millennial homeowners got down-payment help from parents and couldn't have bought without it; after debts, retirement spending and the top 1%, boomers will pass on about $36 trillion of their $93 trillion (Visa, via Fortune)
• Social Security's retirement trust fund is now projected to run dry in the fourth quarter of 2032, a quarter earlier than last year's estimate; after that, payroll taxes cover 78% of scheduled benefits, an automatic cut of about 22% for the 71 million people who receive them (2026 Trustees Report, via CBS News and New York Post)
• For a typical dual-income couple retiring right after that, the cut is about $16,900 a year (Committee for a Responsible Federal Budget, via Fortune)
• In a survey of 189 registered Social Security analysts, 73.5% said clients want to claim at 62, the earliest age, because they fear cuts; claiming at 62 locks in a permanently smaller check for life (NARSSA, via Fortune)
• There were 8.8 workers per beneficiary in 1955 and 3 in 2025; the average woman had 3.6 children in 1960 and 1.6 in 2024; about 40% of private workers had a pension in the 1970s, about 15% do now (Mercatus, Peterson Foundation, NARSSA, via Fortune)
• Three bills to fix it are in Congress; none has passed, and the advocacy group that tracks them says the most complete one is "unlikely to pass" (New York Post)
• State and local pensions carry about $1.5 trillion in debt by their own accounting and closer to $4 trillion by the rules private employers must use; Chicago sends 80% of its property tax revenue to pensions; New York City's mayor proposed skipping this year's pension payment to close a $5 billion gap (City Journal)
• The official unemployment rate is 4.1%, but a measure counting the jobless, the involuntarily part-time and people earning poverty wages hit 24.9% in July, its fourth straight rise; for women it's 31%, the highest since the pandemic recovery (Ludwig Institute, via Fortune)

The letter is the shape of the argument. Not a K, where the top rises and the bottom falls. A G, where one big group loops around and holds most of it, and everyone else is inside the curve, waiting.

Yardeni's numbers are the kind you read twice. Half the country's wealth in one generation. More than half the stocks. Sixty percent of the cash sitting in money-market funds, which means every time the Fed raises rates, and it's about to, the check that shows up in a boomer's account gets bigger while the mortgage quote for their kid gets worse. Same policy, opposite effect, depending on your birth year.

And the houses. Older owners have 3% mortgages they'll never see again, so they stay. Fewer houses for sale, higher prices, more boomer wealth, fewer first-time buyers. A quarter of the millennials who did buy needed their parents to make it work. The parents are the market on both sides.

the date

None of that would be a crisis if the floor held. The floor is Social Security, and it now has a date: the last three months of 2032, a quarter sooner than last year's guess. After that, without a law, everyone's check drops about 22%. For a normal two-earner couple that's about $17,000 a year, gone.

The people who advise retirees for a living are watching something worse than the cut. They're watching people panic into it early. Three quarters of them say clients want to claim at 62, the youngest you can, because they read the headline and want the money now. Claiming at 62 locks in a smaller check for the rest of your life. The fear of the haircut is producing a bigger one, on purpose, by hand.

The math is what it is. Nine workers per retiree when the program was young, three now, and it's the birth rate, not the boomers, that did that. Pensions went from four in ten private workers to fewer than two in ten, so the 401(k) that was designed as a supplement is carrying the load. Three bills in Congress. None moving.

the local version

The same story runs one level down, in city halls. Public pensions owe somewhere between $1.5 and $4 trillion depending on whose accounting you believe, and taxpayers have been the ones closing the gap: state contributions went from $35 billion a year to $185 billion in two decades. Chicago puts eight of every ten property-tax dollars into retirement obligations and the hole is still growing. The new mayor of New York's idea for a $5 billion budget gap was to skip the pension payment, which is how the hole got dug the first time.

That's the property tax bill. That's the reason the road doesn't get repaved. It's the same G, one level down: money promised to the people who already worked, paid by the people working now.

the number nobody quotes

The official unemployment rate is 4.1%, low enough that the Fed calls it full employment and turns its attention to fighting inflation. There's another gauge that counts people who have jobs but not enough hours, or a job that doesn't pay above poverty. It's at 24.9% and has risen four months in a row. For women it's 31%, the worst since the pandemic.

Two dashboards. One says everyone's working, so the priority is prices. The other says a quarter of the workforce is working and still not making it. The G-shaped economy is what you get when the first dashboard is right for the people who own things and the second one is right for everyone else.

The trust fund date is six years and a quarter away. The next Fed meeting is in two weeks.

Sources: Fortune (Ed Yardeni, Visa Business and Economic Insights, NARSSA, Committee for a Responsible Federal Budget, Ludwig Institute), CBS News, New York Post, City Journal.