Spending Habits Across Generations: Insights for 2024-2025

Discover how generational spending habits are evolving and what this means for the future.

The Wealthiest Consumer Cities in the World by 2040

As we look towards 2040, certain cities are projected to lead in terms of consumer spending growth. For instance, if New York City were a country, it would rank 13th globally in consumer spending growth by 2040, contributing 2% of worldwide total consumer class spending. Other cities like Los Angeles and Tokyo also feature prominently in this list.

These cities are categorized as 'Million-Consumer' cities, meaning they each have at least one million people spending $12 or more per day. This metric provides a unique perspective on urban consumer power and its potential to drive global economic trends.

Comparing Generational Spending Behaviors at the Same Age

When we examine spending behaviors across different generations at the same age, interesting patterns emerge. For example, at the age of 25, Millennials in Brazil spent 78% of what their counterparts in Mexico spent. However, as Gen Z turns 25, Brazilian Gen Zers are only spending 55% of what Mexican Gen Zers spend.

Moreover, Gen Z is projected to spend more on specific categories like in-home alcohol compared to previous generations, although from a lower share of total spending. This shift in spending priorities highlights the evolving consumer preferences and economic conditions over time.

Decoding What Drives Consumer Growth

Understanding what drives consumer growth involves breaking down various factors such as the number of consumers, inflation, and increased spending per consumer. For instance, in 2025, consumer growth is expected to increase to $3.0 trillion from $2.7 trillion in 2024. This growth is driven by a mix of existing consumers spending more due to higher disposable incomes and new consumers entering the middle class.

Inflation plays a significant role but is expected to decrease slightly from 56.7% in 2024 to 51.9% in 2025. On the other hand, the proportion of growth driven by existing consumers getting richer is projected to increase from 26.6% to 29.9%.

The Role of Urban Consumers in National Growth Stories

Urban consumers are a key factor in explaining a country's growth story. For example, 83% of India's urban consumer class growth until 2040 is expected to occur outside the five largest cities. In 2000, only 9 cities in India had half a million consumers, but by 2040, this number is expected to rise to 178 cities.

This shift underscores the increasing importance of smaller cities and towns in driving economic growth and consumer spending, thus highlighting the need for businesses to adapt their strategies to target these emerging urban markets.

Which Generation Holds the Most Spending Power?

Looking towards the future, Gen Z is set to become the largest generation with 2 billion people. By 2034, either Gen Z or Generation Alpha will hold the highest spending power in 91 countries, up from 81 today.

In India, for example, the younger generations within the middle class are driving significant spending growth this decade. Gen Z and Millennials in India's core middle class are ranked highest in terms of spending growth, highlighting the immense potential for businesses targeting these demographics.