Consumer spending has long been the backbone of American economic growth, but the latest data reveals an unexpected protagonist keeping the economy afloat: Generation Z. In a surprising revelation that challenges conventional wisdom, Intuit CEO Sasan Goodarzi suggested during yesterday’s quarterly earnings call that Gen Z’s credit card spending patterns might be creating an unexpected buffer against the long-predicted 2025 recession.
“What we’re observing in our financial data ecosystem is unprecedented,” Goodarzi explained during the call. “Despite inflation pressures and rising interest rates, Gen Z consumers are maintaining spending levels that effectively counterbalance weaknesses in other economic sectors.” This statement comes as Intuit’s Credit Karma platform reports Gen Z credit card balances increasing by 32% year-over-year, substantially outpacing millennial spending growth at 17%.
The Federal Reserve Bank of New York’s latest Household Debt and Credit Report supports this trend, showing Gen Z credit card debt reaching $186 billion in Q3 2025, a staggering 45% increase from the same period in 2023. This surge contradicts predictions from numerous economic forecasters who expected tightening consumer spending across all demographics as interest rates remained elevated throughout 2025.
Morgan Stanley’s Chief U.S. Economist Ellen Cooper notes this phenomenon represents a significant deviation from historical patterns. “Typically, younger consumers are the first to pull back spending during economic uncertainty. What we’re witnessing now inverts that expectation, with Gen Z functioning as a counterintuitive economic stabilizer,” Cooper told me during a phone interview this morning.
The implications extend beyond simple spending statistics. Traditional recession indicators have been flashing warning signs throughout 2025, with the inverted yield curve persisting into its second year and manufacturing activity contracting for three consecutive quarters. Yet the broader economy has demonstrated remarkable resilience, with GDP growth maintaining a modest but stable 1.7% annual rate.
JPMorgan Chase’s retail banking division reports that Gen Z customers are utilizing approximately 76% of their available credit, compared to 62% for millennials and 54% for Gen X. This higher utilization rate translated to an estimated $42 billion in additional consumer spending for the third quarter alone, according to their internal analysis.
Why is Gen Z bucking the trend? Labor market data provides crucial context. Bureau of Labor Statistics figures show Gen Z unemployment at just 4.2%, outperforming the broader 5.1% national rate. More significantly, Gen Z wage growth has maintained a robust 5.7% pace, exceeding inflation for the first time since early 2022.
“We’re seeing a generation that entered adulthood during pandemic disruption and now views economic uncertainty as the norm rather than the exception,” explains Dr. Melissa Rodriguez, consumer behavior researcher at Northwestern University. “Unlike previous generations who might instinctively reduce spending when recession concerns arise, Gen Z appears to maintain confidence in their earning potential despite macroeconomic headwinds.”
This perspective aligns with findings from the University of Michigan’s Consumer Sentiment Index, which shows Gen Z confidence metrics 14 points higher than the general population—a historic divergence in generational economic outlook. The index notes that while older Americans express increasing pessimism about economic conditions, respondents under 26 report expectations of career advancement and income growth even amid broader economic challenges.
However, not all experts view this trend positively. Harvard economist Dr. James Chen warns that Gen Z’s spending behavior may simply delay inevitable economic contraction. “What we’re witnessing could represent unsustainable consumption patterns rather than genuine economic resilience,” Chen cautions. “If credit utilization outruns income growth for consecutive quarters, we risk transforming a potentially mild recession into a debt-driven crisis with particularly severe impacts on younger demographics.”
The credit quality metrics partially support this concern. TransUnion reports Gen Z credit card delinquencies (60+ days late) increasing to 3.7% in October, up from 2.9% a year earlier. However, this remains below the 4.5% peak observed during the 2020 pandemic disruption.
Intuit’s Goodarzi acknowledges these concerns but maintains that their internal data shows stronger financial fundamentals than external indicators might suggest. “We’re seeing increased credit utilization alongside improved savings rates and retirement account contributions among our younger users,” he noted during the earnings call. “This suggests considered financial decision-making rather than reckless spending.”
The Federal Reserve faces a complex dilemma in this environment. While cooling inflation has opened discussion about potential rate cuts in early 2026, the resilience in consumer spending—particularly from Gen Z—complicates the timing. Minutes from the Fed’s November meeting reveal divided opinions about whether strong consumer spending represents healthy economic activity or unsustainable momentum that could reignite inflationary pressures.
For investors and business leaders, this generational divergence creates both opportunities and challenges. Retail sectors catering to younger consumers show continued strength, with companies like Lululemon, Sephora, and digital entertainment platforms reporting double-digit revenue growth from Gen Z customers despite broader market slowdowns.
The trend also reshapes how economists evaluate recession risks. “We’re developing new models that better account for generational spending divergence,” explains Cooper from Morgan Stanley. “Traditional approaches that treat consumer behavior as relatively homogeneous across demographics clearly no longer capture market dynamics accurately.”
As 2025 draws to a close, the question remains whether Gen Z spending patterns represent a temporary anomaly or a fundamental shift in how younger Americans navigate economic uncertainty. What’s clear is that any recession forecast that fails to account for this generational dimension risks missing a crucial piece of the economic puzzle.
For now, America’s youngest adult consumers appear to be writing their own economic rules—and in doing so, might be postponing the economic downturn that analysts have been predicting since 2023. Whether this represents financial resilience or a concerning debt bubble remains the trillion-dollar question for 2026.
