The wealth effect from soaring stocks fuels consumption, while Americans without big investment portfolios have been forced to retreat amid elevated inflation and a stagnant job market.

But this notion of a K-shaped economy divided by class obscures a trend divided by generations, according to Wall Street veteran Ed Yardeni, who has dubbed it the G-shaped economy.

In a note early this month, he argued that baby boomers are the real driving force behind consumer spending, which accounts for roughly 70% of U.S. GDP, and detailed how much that generation dominates the economy.

Helped by an extraordinary era of financial and economic gains, boomers now have a net worth of nearly $90 trillion, or about 52% of all U.S. household wealth. That will soon be augmented by the Silent Generation, which will pass on much of their $20 trillion to their boomer kids.

“The concentration of wealth among older generations suggests that consumer spending is increasingly being supported by the spending of accumulated retirement wealth rather than labor income,” Yardeni explained.

Indeed, boomers control about 54% of household stocks and mutual funds, worth close to $30 trillion, and own 41% of all household real estate, more than any other generation.

That’s why boomers can keep spending briskly despite high interest rates and inflation, he said. In fact, higher interest rates actually work in their favor, while elevated borrowing costs squeeze younger Americans.

Boomers hold around $3.1 trillion in money market funds, roughly 60% of the household total, allowing them to earn more interest income as rates rise, according to Yardeni. The Silent Generation has another 16%.

By contrast, many younger Americans have yet to invest, and those who have tend to skew their holdings toward stocks more sensitive to higher rates.

In addition, high mortgage rates are pricing millennials and Gen Z out of the housing market, especially as they start families and need bigger homes. Many boomers, however, have locked in ultra-low mortgage rates from years ago or own their homes outright.

Because older homeowners are reluctant to give up their low mortgage rates, they are staying put rather than downsizing. That limits the supply of homes available for sale and boosts home prices—adding further to boomers’ wealth.

“This dynamic helps explain why higher interest rates have done less to restrain consumer spending than many economists anticipated,” Yardeni added. “For a large segment of the population, rates are not simply a cost of borrowing. They are also a source of income and the reason that home prices are rising!”

Parents are still helping their millennial and Gen Z kids

Of course, the AI boom is another major driver of economic growth, as just a handful of hyperscalers are on pace to spend more than $1 trillion next year. But the flood of money is also lifting stocks in tech, infrastructure, energy and construction, delivering gains across generations.

Meanwhile, boomers are largely insulated from the labor market, which AI could disrupt. Since they are already retired or approaching retirement, they don’t base their spending on wage growth, hiring conditions, or job security, Yardeni pointed out.

But sitting atop the economy doesn’t mean boomers are cut off from younger generations.

For instance, they’re indirectly affected when their adult children struggle to find jobs or earn enough income to support themselves, he noted.

Boomers are also helping out their kids by sharing some of their wealth now rather than waiting to die to pass it on.

A report last month from Visa Business and Economic Insights found that a quarter of millennial homeowners got help on the down payment from their parents and wouldn’t have been able to buy their current home without it.

“Rather than waiting to pass down inheritances later, many boomers are using their wealth to help their children clear major financial hurdles now, when the support will have the greatest impact,” Visa said.

Still, younger generations shouldn’t expect a windfall from inheritances. The same report said boomers will pass on just $36 trillion of their $93 trillion in wealth. That’s after excluding wealth from the top 1% of households, subtracting debts and other liabilities, and deducting retirement spending, charitable donations, taxes, and fees.

Despite being the wealthiest generation, boomers are still burdened by significant debt, including mortgages, credit cards, and auto loans; borrowing against brokerage accounts and other investments; and personal and business loans.

“Taken together, the high share of cost-burdened older homeowners and substantial non-mortgage debt indicate that many baby boomers have far less financial flexibility—and potentially less wealth to pass on—than headline figures might suggest,” Visa said.