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Gen Z's surging economic power will permanently change the investing landscape over the next decade, Bank of America says

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  • Generation Z’s economic power is the fastest-growing around the world, and investors should start preparing for tectonic shifts in consumer preferences, Bank of America strategists said Thursday.
  • Gen Z’s earnings are set to hit $33 trillion by 2030 and account for more than a quarter of all global income. By 2031, the youngest generation will surpass Millennials’ spending power.
  • Sustainable luxury, e-commerce, new media, and online payment businesses are set to benefit from Gen Z’s ascendance.
  • The tobacco, meat, and travel industries will face new pressures as the group turns away from more traditional goods.
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Generation Z is on the brink of disrupting everything from luxury goods to alcohol consumption. Investors should start preparing now, Bank of America strategists said Thursday.

The youngest generation’s economic power is the fastest-growing around the world. Gen Z’s — or “Zillennials'” — income is set to grow 400% over the next decade to $33 trillion, according to the bank. The cohort — made up of those born after 1996 — will hold more than a quarter of global income by 2030 and surpass Millennials’ spending power the year after.

The generation’s ascendance will only be augmented further by generational wealth transfer, the team led by Haim Israel said. Baby Boomers and members of the Silent generation sit on roughly $78 trillion of household wealth today, offering the world’s youngest even more spending power as they grow older.

“The Gen Z revolution is starting, as the first generation born into an online world is now entering the workforce and compelling other generations to adapt to them, not vice versa,” the team said.

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E-commerce is among the industries poised to benefit from the rise of Gen Z. Roughly 45% of US teens are “almost constantly” online, according to a Bank of America survey. More than a quarter of Zillennials said their top payment choice is their phone, while credit cards didn’t breach the top three.

Old media such as cable TV will lose out to online platforms, and more traditional forms of media entertainment will lose market share to eSports and streaming services, the team said. Telecom service providers will benefit from Gen Z treating internet access “as necessary a utility as water or electricity,” they added.

Gen Z will focus more on environmental and social causes across all facets of life. ESG will garner a larger focus as the generation moves into markets, the bank said. Gen Z is the least likely generation to pick experiences over goods and values sustainable luxury by weighing quality over price as a top buying factor.

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The group’s takeover of economic power also spells doom for some long-standing trends. More than half of Gen Z claims to not drink alcohol, compared to a third of Millennials, according to the bank. The youngest generation is also likely to shift further away from tobacco and instead take up alternative products including marijuana.

More than half of Gen Z has a type of meat restriction, setting up the plant-based meat industry for further growth while endangering traditional meat producers. Restaurants and grocers will likely face increased competition from online food delivery and meal kit businesses, the team said.

Banks will be challenged by Gen Z’s openness to robo-advisors and mobile-focused investing platforms. Mortgage lenders could face pressure from a lack of homebuying; Gen Z, or “Generation rent,” is the only generation to prefer city living over moving to suburbs or rural areas, the bank said.

Sustainable activism can cut into “harmful” fashion and other goods. The airline and hotel industries could be hit by “flight shaming” and concerns around the ecological costs of travel, according to the bank.

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