>>AC Flyer I find your demographic argument plausible. But what if you are off by a few years? 2010 is not that far off......If you are off by 5 years, your theory will neatly match Jay's expectations.<<
KyrosL, thanks for your post. To the above point, I believe that what Jay and I expect is essentially identical, though Jay expects it (imho) for what amount to structural reasons - excessive leverage, etc. - while I propose it for the demographic reasons I have laid out. If I am off by 5 years, Jay's scenario and mine will neatly coincide, as you say.
However, I would make the point that while Jay's expectations are entirely reasonable, they are qualitative and come without a timetable. My scenario can be and has been back-tested for 100 years and explains very well the behavior of both the economy and the stock markets since 1900. Within the context of the demographic argument, which is quantitative, a 5 year error would be enormous. It would require the misplacement of as much as 10% of the US population within the demographic pyramid. US records of live births and deaths and also of immigration are excellent and do not allow the possibility of this kind of gross error.
The most puzzling aspect of all this to me is that an excellent quantitative tool exists to predict the future of the economy and the stock markets and it is so little used. I will qualify this by saying that demographic analysis is not a tool for traders, but it can tell you what the long term trend will be in GNP growth and in the equities indexes.
>>Have you taken into account that unemployment is hitting boomers with good white collar jobs a lot harder than previous recessions, thus forcing them to "retire" a lot sooner?<<
This is anecdotal only, with little support in the unemployment data. The current creative destruction in the US economy is nothing special - it's a net positive for the economy as labor is redeployed into higher value-added activities, just as it always has been in the past. Within a few years, the press will be focusing on the labor shortage in the US, as the boomers retire in increasing numbers and the unemployment rate heads down towards 3.5%. |
