Photo: Flickr / breezy421
The Great Recession may have delayed the plans of many recent college graduates.But the “Echo Boom” generation — the sons and daughters of Baby Boomers — are too numerous to be kept down.
There are 80 million of them, and they’re out to save the American economy.
All of the normal things that drive the economy — household formation, entering the workforce, etc. — will be driven by this slice of the population.
Thanks to the Echo Boom…
- Stocks will go up
- More households will be formed, leading to a recovery in real estate.
- The national income will surge.
- Lots more spending will happen.
We wanted to explain why, despite the licks they’ve taken, this group will end up bailing out the economy.
They're generally defined as having been born between 1980 and 1995, making the oldest Echo Boomers just 33. If you conceived to Duran Duran, you gave birth to a Millennial.
JMPG estimates nearly 3 million in pent-up demand. And look at the growth rate in couples! (Data not available for same-sex couples).
And nine out of 10 millennials say they eventually want a place they own, according to a recent Fannie Mae survey.
And only 22% of investors under age 35 -- many fewer than in 2001 -- say they're willing to take on substantial risk.
But analysts like Tobias Levkovich believe that will change as the cohort enters prime earnings age — we know that the more 30 somethings, the higher the S&P goes.
And equity values turn out to be closely related to the age distribution of the population, so you can plot the path that the P/E ratio is likely to follow in the next few decades based on demographics.
Finally and most importantly, they are waiting longer to get married. Presumably that means more economically efficient marriages and fewer inefficient (ie divorce-fated) ones.
In sum: this better-educated, more financially savvy generation will yield a higher stock market, higher earnings, stronger economy.
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