The millennial generation will save the U.S. economy from the doldrums that many economists say are gathering on the horizon, according to Josh Jamner, investment strategy analyst at ClearBridge Investments.

Although some economists think the fact that baby boomers are exiting the work force in record numbers will be a drag on the economy, Jamner has a different view of the economy's future.

“The coming one to two decades should see more of a benefit from a shift in demographics as the large millennial generation enters its peak period of economic activity," Jamner said in an interview. "This will offset any drag created by baby boomers. As the millennial generation takes over the middle aged cohort from the much smaller Gen X, economic growth should see a lift over the coming decade and beyond given that millennials are entering their prime spending and earning years.”

Jamner also argued that the shift from that smaller number of Gen Xers will create and sustain a boost for the stock market, as millennials earn more and invest more.

The post-World War II baby boomer generation includes about 71.6 million people. Gen X, which follows the boomers and includes people born between 1964 and the early 80s, has approximately 65 million members. The number of millennials, which includes those born between the early 1980s and the early 2000s, jumps to 72 million members.

Jamner posits that the shift in population to the larger millennial generation should correlate with a rise in the stock market, which he believes will see sustainable, long-term gains. Peak earning, spending and investing years are between ages 35 and 54.

“This group, which is having children and buying houses now, will create a tailwind for the economy,” he said. “There are 6.9 more millennials than Gen Xers and they are spending and investing more money, which will boost the stock market as well as the economy. Boomers still have the bulk of the wealth in the United States, but that is not the key factor. The key is that most millennials have not reached 35 yet” and are just beginning to hit peak spending years.

In addition, he added, because boomers have most of the wealth they will not need as much support from their children, which will leave their children in the millennial generation with more assets to spend.

The trends, which Jamner discussed in a recent article he co-authored for the ClearBridge website, “U.S. Demographics Not All Doom and Gloom,” noted that many economists feel the U.S. economy is heading into a period of slow growth in the next couple of decades.

“Conventional wisdom holds that GDP growth should slow," Jamner said in the report. "However, a closer evaluation of demographic data suggests there is more to the story. While the graying of America has been a headwind to economic growth over the past 15 years, the coming two decades should see more of a benefit from demographic changes as the millennial generation enters its peak period of economic activity.” 

Any economic slowdown caused by the pandemic is a shorter-term phenomena than the demographic changes that are coming, he added.