David Rosenberg: Here’s The Ugly Demographic Reality That Dooms The US To Sub-Par Growth

The latest from David Rosenberg at Gluskin-Sheff is chock full of bearishness (and bond bullishness, and allusions to Japan, etc.) but this caught our eye:

Harry Dent is one of the world’s most widely read demographers and market commentators and we saw something in one of his publications that really caught our eye. A focus on one particular part of the Baby Boom population — notably the one that really drives spending, wealth gains and income. It’s the 45-54 year old cohort.

Indeed, we back checked through the assertion by sifting through the Fed’s database (mainly the survey of consumer finances) and found that this cohort does indeed have the lowest savings propensity, the highest earnings level and the greatest increase in net worth compared to other age categories.

From 1984 to 2010, this cohort rose each and every year. That didn’t prevent business cycles from occurring or the odd vicious bear market, but over that period, the stock market, in constant dollar terms, advanced 240%. But starting next year, this key age cohort for both the economy and the markets will begin to decline — according to official forecasts, each and every year to 2021. The last time we saw sustained declines in this part of the population was from 1975-83, which was an awful time for both the economy (except for that very last year when the negative growth rate in this age segment was drawing to a close) as the S&P 500, in real terms, was as flat as pancake and real per capita income barely expanded.


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