Posted on 07/21/2009 2:31:28 PM PDT by arthurus
It's no secret that different age groups have different spending patterns. Younger people are a drag on economic growth since they consume a great deal but don't produce. In other words, they exacerbate inflation since they increase demand and reduce supply for goods. On the other hand, middle aged people are high earners, producers, and spenders. They tend to moderate inflation and prop up asset prices. Peak spending occurs on average at age 48. Spending patterns resemble a bell curve, so beyond this age, spending tapers as people save for retirement.
(Excerpt) Read more at seekingalpha.com ...
saving for retirement at age 48? That’s a bit too late to do anything of significance.
Also saying the youth is a drain is false as well, who else is going to work at McD’s and Walmart? Retirees and young ones.
I’m not dissing that type of work, but typically the minimum wage jobs are done by those types of people...without them we’d have to pay a lot more for our goods/services.
And how much different would demographics be if all those aborted babies were here?
I think the chart of births (offset by 48 years) vs. the DJ average would have been more useful (and dramatic) if the births were normalized as percentage of the population. In other words, 4.7 million births in the late 40s and early 50s were a much larger percentage of the population than 4.2 million births in 2008. Therefore the impact on the economy would be much more exaggerated...
hh
to arthurus
amen! Who knows what a million plus babies who were aborted would mean to this country.... plus, not having all the blood on our hands.... shame on you America...shame on you
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
How many jokes have I heard that teenagers are what propped our economy, buying fast food, clothes, movies, and over priced concert tickets?
I read a paper in an economic journal around 1990 that predicted the economic ruin of Europe, Japan, and the USA because of unfunded entitlements from the wave of retiring Baby Boomers.
I have read editorials in Barrons and the WSJ for the past 15 years warning about the perils of subprime loans, excessive debt, CDSs, the carry trade, etc., ad nauseum.
The politicians are either economic ignoramuses, crooks, or fools.....or all of the above.
“Youth as a drain” is a relative term. It is better said that youth progresses from being an absolute drain (children) to being a non-contributor (early 20’s) when their earning power is low and many of them are saddled with student debt, so their discretionary income is low and their spending effect and multipliers are low.
From the standpoint of consumption of large, durable goods (cars, boats, housing, furnishings, etc) people start consuming in earnest in their mid-30’s and taper off quickly after 50. By the mid-50’s, people quit buying second homes and start divesting themselves of “stuff” to get their burn rate pared down for retirement.
The main cohort of boomers is well into their 50’s now, and their patterns of consumption are going to contract very quickly after this financial shock. You can see the American rate of savings going up very, very rapidly in the Fed’s “Fred” database:
You can see where people’s savings went negative in 2005, as they strip-mined equity out of their houses. And you can see how quickly savings have shot up in aggregate.
This rapid turn-around of people into savers is what threatens any consumer-led recovery. A turn-around in consumer behavior as rapid and as large as this is going to break more than a couple models and assumptions about US consumer behavior going forward.
Yeah I would think a tendency to spend less at 48 is more due to wanting to accumulate less stuff. Or spending all their money on the kids. :D
The dirty little secret is that this is exactly what drives the push for amnesty for illegal immigrants in this country. Every adult illegal alien represents a ready-made consumer who didn’t have to be raised and educated here in the U.S.
I would amend that — it WAS (nb the past tense) what was driving the push for amnesty — that the illegals, once ‘legal’ - would buy up the surplus of homes.
Now with unemployment predicted to top 10% easily (BLS U-3 figures), making the illegals legal would instantly pop up the unemployment stats - by perhaps a half million to a million former illegals.
Suddenly The One’s economics would look even more suspect than they do now, and unskilled, low-skill and even trade workers would have additional competition on top of what they have now. Especially males.
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