Bank of America economists Stephen Juneau and Aditya Bhave analyze the stock market's strong performance. They identify it as a key factor in declining labor-force participation among older workers. In a research note, they stated, "We think the strength of the equity market is partly to blame" for a "stock-fueled retirement party."
The analysis highlights a significant drop in the labor-force participation rate for workers aged 55 and older. This rate fell from 38.6% in August 2024. It now stands at 37.2%.
This trend correlates with substantial S&P 500 gains over the past few years. It also aligns with a significant increase in household net worth. Stock market returns largely drove this increase. The exodus of older workers from the workforce contributes to a relatively low overall unemployment rate.