Welcome to Thoughts on the Market. I'm Ellen Zentner, Chief U.S.

Economist for Morgan Stanley Research and as part of this special series I'm going

to share some timely work that our team has conducted on millennial and Gen Z demographics

and how these two outsized generations could possibly dispel much of the gloom around

aging baby boomers delivering a sort of youth boom to US GDP, consumption, wages, housing, and a host of sectors in the coming years.

A popular narrative right now says that with the aging of the baby boomers the US economy is headed south.

But while the baby boomers have indeed exerted a drag on growth, this doom and gloom thesis

misses the fact that America's youth could soon relieve this downward pressure.

Generation Y, which we often call the millennials,

actually overtook the boomers as the largest generation in the U.S. last year,

and Gen Z, born between 1997 and 2012 will actually overtake Gen Y as the

country's largest generation by 2034 ultimately peaking at 78 million.

So yes one outsized generation is aging but right behind them are not

one but two comparably large generations. So what does this mean for the U.S. economy?

To dig into this we combine some top-down work from my team

with bottom-up insights from Alpha-wise, the firm's evidence-based team

conducting a survey of nearly 6,000 consumers age 16 to 34.

What we found was that as Jens Y and Z combined in the workforce,

the two generations could power higher consumption, wages,

and housing demand, which are all pillars and drivers of GDP growth.

Moreover, we actually found a disconnect between our work and the Census Bureau's projections

for population growth and the Congressional Budget Office outlook for labor force growth.

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