Generation Z (Gen Z) is the demographic cohort succeeding Millennials and preceding Generation Alpha. The generation is most frequently defined as people born between 1997 and 2012. Gen Z now comprises 20.7% of the U.S. population and 40% of the global population. Does this cohort’s growth matter for investors?
According to Bloomberg, Gen Z commands a remarkable $360 billion buying power, a steep increase from $143 billion 4 years ago. Once Zoomers graduate from high school and college, their proportion in the labor force will rise and earnings will have an even greater influence on the economy.
Though Zoomers have financial worries about higher living costs while covering basic needs, their different spending preferences and lifestyle require different investment themes. Firstly, a staggering 98% of Gen Z use social media and as a result it is a key source of information for Zoomers. Secondly, Gen Z loves to buy now and pay later. Online education, online gaming, pet ownership and health lifestyle businesses disproportionally benefit from booming Zoomer demand. Lastly, Gen Z are risk-takers. Over half of them have crypto and more than 50% of Gen Z use investment apps instead of personal advisors to manage trades. Gen Z represents new generational preferences and spending patterns. Investors able to identify strong and sustainable businesses that are digital platform native, social media native and crypto native are likely to profit from them over a long-term investment horizon.
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