Ellen Zentner: The Rise of the SHEconomy

Demographic changes are making women in the U.S. more powerful economic agents, driving spending and GDP.

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Welcome to Thoughts on the Market. I'm Ellen Zentner, Morgan Stanley's Chief U.S. Economist. Along with my colleagues bringing you a variety of perspectives, today, I'll take a closer look at women's role in the economy and the impact they could have over the next decade. It's Friday, October 20th, at 10 a.m. in New York.

Last week, Harvard economist Claudia Goldin won the Nobel Prize for her work identifying the causes of wage and labor market inequality. Not only is her work notable for its subject matter, it is also because Claudia is the first woman to win the Nobel in economics by herself. In other words, all of the credit goes to her. Golden's body of work has included the role of contraception in helping women with family and career planning, something we studied as well. The rise of what we have dubbed the "SHEconomy" is a topic we at Morgan Stanley Research first covered in 2019 and continue to follow closely.

For some context. Today, women are having fewer children and earning more bachelor's degrees than men. The median marriage age for women has increased, as has the age at which we first start bearing children. These shifting lifestyle norms are enabling more women to work full time, which should continue to increase participation in the labor force among single females. In 2019, we estimated that the number of single women in the U.S. would grow 1.2% annually through 2030, and that compares with 0.8% for the overall population. Based on these calculations, by 2030, 45% of prime working age women will be single, the largest share in history. Now, data show that women outspend the average household and are the principal shoppers and more than 70% of households. So women are very powerful economic agents. They contribute an estimated $7 trillion to U.S. GDP per year. They are the breadwinners in nearly 30% of married households and nearly 40% of total U.S. households. In the last decade, single prime working age women from 30 to 34 years old have seen the most pronounced rise in female headship rates, and that's followed by 25 to 29 year olds.

Now, if we look back as far as 1985, female homeownership as a share of total homeownership has risen from 25% to 50%. And our projection suggests that with rising female labor force participation and further closing of the wage gap, female homeownership should rise as well.

So the profile of the average American woman is also changing, whereas the average American woman in 2017 was white, married and in her 50's, holding a bachelor's degree and employed in education or health services. We think that by 2030 she is more likely to be younger, single and a racial minority, holding a bachelor's degree and employed in business and professional services.

Indeed, over the last several years, gender diversity, the male-female wage gap and women's role in the workplace have rightly been a key media and social topic and something that we at Morgan Stanley are very passionate about. And for women, these public discussions have set the stage for equality in areas like education, professional advancement, income growth and consumer buying power. We've come a long way, but it's important to underscore that more work remains to be done.

Looking ahead, women are in a position to drive the economic conversation from both the inside as a workforce propelling company performance, and the outside as consumers powering discretionary spending and GDP.

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