A new Bank for International Settlements working paper by economist Elod Takats looks at the interaction of demographics and asset prices and finds not a meltdown but a long hard slog for house prices and, by extension, for other assets like stocks.
“If you look at the U.S., or most English-speaking countries, the next 40 years is substantially different from the last 40,” Takats said.
“We had demographic tailwinds over the past forty years and will have headwinds over the next forty.”
It never mentions the impact abortion has had on demographics, but it is an obvious factor.
I’m a baby boomer who has been stingy. But let’s leave that aside and consider another more interesting issue: culture wars. We: the liberal, urban-coastal upper middle class will survive while you–you conservatives who post on this blog–are going to diminish and become increasingly despised and powerless. You are dead meat. You are gone.
Does this mean the end of Christianity? Certainly not–not unless it becomes completely identified with YOU jerks.
Many seniors are now looking to move assets into off-shore investments, in countries that are still growing. That will put more pressure on US stock prices in addition to the more expected draw-down of the retired using their assets to live on. I
doubt the DJI will ever again hit 14,000 unless the dollar is devalued, which would be a whole other catastrophe. There simply won’t be the “push” from large amounts of Boomers’ IRA/401K/rollovers looking for investments to bid the stock prices higher.
The Gen-Xers are in the stage of life where they are raising kids, paying off the mortgages, etc and have little extra money for savings. The Millennials as being more live in the moment, spending what they earn as soon as they get it. And many of them have massive student loans hovering over their heads. So I don’t see them becoming savings minded soon.
While the unemployment situation has made everyone more aware of the need for an emergency fund, I don’t see that going into stocks, most likely into savings accounts or MM funds, so as to be readily available in case of need.
As for housing, I think we may be headed back to the pre-WWII era when renting was the norm, and home ownership didn’t usually happen until middle-age, if at all. Landlord/investors are not going to bid the price up beyond the level of a decent return-on-investment from the rental of a house.
The GI Bill was what changed the dynamic of the country and indirectly created the Boomer generation. I don’t see that happening again, no “excuse” for it and no money for it.
At 73, I see a less hopeful financial outlook for our citizens than I experienced in the past.