Gen Z and millennials are creating a recession-resistant corner of the market

• Gen Zers and millennials are to thank for propping up one area of the market in particular: health and wellness.
• Younger Americans are spending significantly more in the category, BofA data shows.
• That could give wellness stocks a boost and help the sector weather a recession, analysts said.

Gen Zers and millennials are spending big and helping insulate one area of the market from a recession: the wellness industry.

Bank of America analysts said Tuesday that younger Americans look to be driving a long-term interest toward healthier lifestyle habits, something that could support the health and wellness sector to continue to grow even if the economy turns.

"We believe there is an ongoing generational shift toward healthy habits, which is supportive of wellness stocks. Younger demographics including Gen Z and millennials are increasingly prioritizing healthy ways of living and spending increased time and income on fitness, activity-based leisure, and wellness focused discretionary items," the bank wrote in a note on Tuesday.

As a whole, households look like they're starting to pull back on discretionary spending. Retail sales rose 0.2% in February, well below the 0.7% growth economists were expecting for the month. Still, spending at fitness centers climbed 7% year-over-year, Bank of America card data shows, the largest increase in 19 months.

On average, Gen Z households spend around 2.8 times the amount that baby boomers do on fitness, while millennials spend around three times as much, the bank added.

Young people's affinity for health and wellness is also evident in alcohol spending, with more Gen Zers and millennials shifting away from drinking in recent years. Spending growth for non-alcoholic beer and seltzers has outpaced spending growth for the alcoholic version of those beverages for the last four years, BofA data shows.

Interest in certain wellness trends has also increased. Google search volume for "cold plunge" and "red light therapy" soared throughout 2023 and 2024.

Here are the top three wellness stocks Bank of America sees benefitting as Gen Z and millennials invest in their health:

Life Time Group Holdings (LTH)

Current price: $30.04

Performance year-to-date: +34.17%

What the analysts say:

Life Time is seeing the strongest growth among millennial and Gen Z users on its app. Monthly active between the ages of 18 and 44 grew 60% in 2024, according to Sensor Tower data cited by BofA.

The company has also performed well in past recessions. During the downturn of 2008, the company saw its profit margins rise, according to the bank's analysis.

"We believe the company is particularly well positioned to take advantage of shifting wellness, fitness, and leisure trends with current strategy aligned to the fastest growing trends," analysts said, pointing to LTH's pickleball and cold plunge offerings.

Planet Fitness (PLNT)

Current price: $95.89

Performance year-to-date: -3.72%

What the analysts say:

Card spending growth at Planet Fitness has outpaced overall card spending at fitness centers since the start of 2023, according to Bank of America data.

Planet Fitness's business also remained resilient through the 2008 recession. Same-store sales for the gym chain averaged around 21% through the downturn, on par with the years leading up to the recession, according to BofA's analysis of company filings.

Sharkninja Inc (SN)

Current price: $84.27

Performance year-to-date: - 13.05%

What analysts say:

The company makes a variety of home devices and kitchen appliances, including a line of blenders popular with fitness influencers and health gurus.

Social media engagement with Shark Home and Ninja Kitchen is up significantly on TikTok, according to BofA's analysis of comments, shares, likes, and video views on both TikTok accounts.

The company looks on track to beat revenue estimates in North America by around 8% in the first quarter, according to Neilsen point-of-sale data cited by analysts.