Will boomers make the economy go bust?

Conventional wisdom: increasing proportion of old folks will be a drag on the consumer economy.

People in their 50s spend more than younger – or older folks … by a lot.

The economic implications are monumental.

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Here’s the logic from Bill Gross at PIMCO:

Demographic population changes are becoming a silent growth killer.

Numerous studies and common sense logic point to the inevitable conclusion that when an economic society exceeds a certain average “age” then demand slows.

Typically the dynamic cohort of an economy is its 20 to 55-year-old age group.

They are the ones who form households, have families and gain increasing experience and knowhow in their jobs.

Now, however, almost all developed economies, including the U.S., are gradually aging and witnessing a larger and larger percentage of their adult population move past the critical 55-year-old mark.

This means several things for economic growth.

From the demand side, it suggests a greater emphasis on savings and reduced consumption.

A significant reduction in demand have imperiled Japan for several lost decades now.

A similar experience will likely turn many developed economy “boomers” into “busters” within the next several years.

Source

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