Baby Boomers' Shopping Habits Cost the US Economy 1.2% of GDP, New Study Reveals

A Swedish central bank working paper has found that middle-aged shoppers are weakening competition in the US economy — and the effect is now reversing as baby boomers retire.

The shopping habits of middle-aged consumers, largely driven by the baby boomer generation moving through midlife, weakened competition between firms enough to shave up to 1.2 per cent off US real GDP at its peak, according to the research from Sveriges Riksbank.

The paper, titled 'The Macroeconomics of Aging Consumers: the Competition Channel', was written by economists Daniele Angelini of the University of Vienna and Max Brés of Sveriges Riksbank. It was published as Riksbank Working Paper No. 471 in August 2026.

How Middle-Aged Spending Weakens Competition

The researchers built a model tracking how consumers behave differently depending on their age. Middle-aged shoppers, defined in the study as those aged 45 to 64, tend to have high search costs and low elasticity of substitution.

In plainer terms, they are less inclined to compare prices across shops and more loyal to brands they already know. Older, retired consumers behave very differently. With more free time and a lower opportunity cost of shopping around, they search harder for the best price and are far more likely to switch sellers.

The researchers describe this dynamic as an 'aging demand competition channel', a mechanism distinct from the labour-market effects of an ageing population that economists usually focus on.

Price Rises and Output Falls: The Numbers Behind the Claim

To isolate the effect, the authors combined the World Input-Output Database with United Nations population projections, tracing how sectors exposed to shifting foreign demographics behaved between 1996 and 2006.

They found that a one-percentage-point rise in the middle-aged share of consumers was linked to a yearly price increase of between 0.43 and 0.77 per cent. Output fell by between 0.36 and 0.55 per cent, while profit shares rose by between 2.13 and 5.13 per cent over the same decade, according to the paper's estimates.

The authors say this pattern — prices and profits rising while output falls — is a hallmark of weakened competition, not a standard demand shock.

A Turning Point as Boomers Retire

When the researchers applied their model to the US economy, they found the effect tracked the ageing of the baby boomer generation almost exactly. As boomers moved from their twenties into middle age, competition weakened steadily, with the drag on real GDP peaking at around 1.2 per cent in the mid-2010s.

Roughly three-quarters of that loss came through reduced consumption, with the remaining quarter linked to weaker business investment, the paper states. Since then, the effect has started to reverse as the same cohort has entered retirement and begun shopping around more aggressively, based on the study's findings.

The findings add a demand-side explanation to long-running debates over why competition has weakened and market power has grown across advanced economies in recent decades. They also carry a warning for policymakers considering raising the retirement age.

While working longer boosts labour supply, the study suggests it may also delay the point at which people become more price-conscious shoppers, potentially offsetting some of the competitive benefits that come from an active, price-comparing retiree population. The authors say a fuller assessment of ageing societies should weigh this demand-side effect on competition alongside the more familiar labour-market and fiscal consequences of an ageing population.