Why are boomers and Gen Xers more pessimistic about the economy?

In the latest consumer confidence numbers released Tuesday by The Conference Board, the January index fell to its lowest level in almost 12 years.

Confidence fell across political affiliation, household income, and age. But when it comes to age, the drop was sharper among older Americans — Generation X, baby boomers, and the Silent Generation.

Michael Strain, an economist at the American Enterprise Institute, has been going to the same French restaurant in Arlington, Virginia, for more than a decade. And in the last handful of years, he’s watched menu prices climb. 

“I kinda feel like somebody’s punching me in the face and taking a couple of $20 bills out of my wallet,” he said. “That produces a sour feeling.”

Strain understands the forces behind inflation, and he’s done the math on whether his earnings have kept up. They have. But that logic only takes him so far, and he still feels bad about inflation.

“I feel that way because I am comparing prices today to what they used to be,” he said.

Strain is 44, so that’s an actual reference point for him — a history that most people in their 20s are too young to have. It’s likely a big reason why Americans under 35 have a bit more confidence in the economy, and why those 35 or older have less.

Michael Madowitz, an economist at the Roosevelt Institute, said it’s true that Gen X has the lowest level of consumer confidence.

“As a barely Gen Xer, I will totally own our saltiness,” he said. “Maybe you’re taking a longer view… and you’re thinking about it as more of a 10- or 20-year thing instead of a six-month thing. I think that can really change your overall outlook.”

That means thinking about longer-term questions, like “Can I pay for my kids’ college? Can I support my aging parents? Will I be able to collect social security?”

Dana Peterson, chief economist at The Conference Board, said it’s important to measure consumer confidence by age because it can help better understand the economy. For instance, less-confident Gen Xers might pull back during their peak earning and spending years.

“And that’s super important because consumption is 75% of the economy if you add in goods, services, and housing,” Peterson said.

She said, in some ways, a specific age group’s feelings can be a more pointed signal to understand where the economy is heading.