Older millennials spend about twice what Gen Z does on hobbies, Bank of America Institute finds

Spending per head is two figures multiplied together: the share of a group that buys at all, and what each buyer spends. The Bank of America Institute index measures the second. On it, older millennials score a little over 200 against Gen Z's 100 for the three months through August ^[2]. They lead on the first figure too. A higher share of older millennials have any hobby spending than any other generation, BofA Institute economist Joe Wadford told Fortune ^[4]. Multiply the two and the per-head gap to Gen Z is wider than two to one ^[1]. Fortune did not report the penetration rates, so how much wider is unknown.

Growth is where the attribution gets looser. Wadford said millennials have seen accelerating hobby spending over the past two years, while most other generations have cooled in spending or transactions ^[5]. As Fortune reported it, the acceleration belongs to millennials as a whole, younger half included. "Most" also leaves room for one other generation that kept growing.

The top of the ranking is crowded. Baby boomers and Gen X follow older millennials closely ^[8]. The basket behind the ranking covers arts-and-crafts stores, hobby shops, outdoor retailers, ski resorts, scuba rentals, educational toys and some toy stores, and it leaves out travel, golf and video games ^[9]. According to the BofA Institute, Gen X is particularly prone to golf ^[10].

Wadford puts the lead down to life stage. "Older Millennials seem to have more in common with younger Gen Xers than they do with Gen Z or even younger Millennials," he said ^[7]. Jessica Lautz, deputy chief economist at the National Association of Realtors, told Fortune in April that the generation was going through a "definite split" between those who locked in low mortgage rates and those who did not ^[13]. "It becomes a renter versus an owner economic scenario," she said ^[14]. A third explanation is household spending. Adults aged 35 to 44 average about four hours and 15 minutes of leisure a day, the lowest of the Census Bureau age groups cited in the report ^[11]. Wadford said it "makes sense" that millennials are buying for their children or young relatives as well as for themselves ^[12].

In my view the evidence supports a ranking of spend per buyer across a narrow set of shops. It does not yet show that older millennials are the growth base for discretionary spending generally, because the acceleration is reported for the whole generation and the basket omits travel, golf and video games. On the cause, the life-stage account comes from the person who produced the data. Wadford also said it is unclear whether millennial homeowners outspend renters on hobbies ^[6]. A comparison of owners and renters of the same age would settle the question. If owners spend far more, the demand belongs to a cohort with cheap mortgages. In that case younger millennials, who are more exposed to housing costs and delayed ownership ^[16], will not fill the age bracket behind them.

A hobby merchant would spend its budget differently under each account. Under life stage, money aimed at today's older millennials goes to an age bracket that refills every year, and money spent courting Gen Z hobbyists goes out years before their spend per buyer gets anywhere near double. Under the housing account, the same budget follows a cohort that shrinks as it ages out, and the renters behind it may never reach an index of 200.