Demographics: A Triple Economic Boom Is Coming

THREE PRIMARY DRIVERS IN YEARS AHEAD In the next 10-15 years, the financial markets and economy will be significantly impacted by three major forces: (1) Millennials, (2) Generation Z, and (3) artificial intelligence. These forces could propel the secular bull market in stocks into the mid-2030s. DISTRACTED BY THE BABY BOOMERS While it is true Baby Boomers are aging (59-77), we should not lose sight of the extremely large, well-educated, and economically influential younger generations, Millennials and Generation Z (Gen Z). Millennials overtook the Baby Boomers in 2019 to become the largest generation in the United States, which means focusing solely on Baby Boomers does not provide much insight into positive generational offsets. Demographics provide insight into what is coming in the next 10-15 years, which is more important in the realm of investing than what happened in the last 10-15 years. Thus, markets are not focused on the current financial state of Millennials and Generation Z, but rather the inevitable progress they will make in the areas of income, home ownership, and wealth accumulation between now and 2035. As we march forward in time, the economic relevance of Millennials and Generation Z will increase every year and the economic relevance of the Baby Boomers will decrease. WHY DEMOGRAPHICS MATTER Having a large percentage of the population available to perform productive tasks is a key driver of economic growth, something that became painfully obvious during the COVID pandemic. As shown in the graph below, the prime working age population (25-54) declined between December 2007 and December 2012, a challenging period for the U.S. economy and stock market. When the prime working age population began to rise again in 2013, the S&P 500 was able to exceed the highs made in March 2000 and October 2007. After peaking in 2018, the prime working age population bottomed out near levels seen at the 2007 peak and began to rise again in late 2021. Thus, the trend in this key labor metric is favorable in 2023, which partly explains the resiliency of the U.S. economy. The graph below shows the population of the 25-54 age demographic. KEY WORKERS ARE AVAILABLE AND WILLING TO WORK Having a favorable trend in population does not necessarily equate to a population that wants to work. In the graph below, notice the 2020 COVID plunge in the age 25-54 labor participation rate, which was bad news for the U.S. economy. The good news is the key labor metric quickly resumed the favorable trend that began in 2015. In Q1 2023, the participation rate cleared the pre-COVID high, which means the labor market has improved significantly. The 25-54 labor force participation rate is above levels seen during the strong pre-COVID economic window. EXPERIENCE AND SKILLS ADD VALUE The second key metric that impacts economic growth is the quantity of workers with productive skills and experience, which is strongly correlated with earnings. Workers between the ages of 35 and 54 tend to be experienced and have a productive skill set that is in high demand. Thus, maximum career earnings logically fall in the age 35-54 window. Workers tend to spend and invest more when they are making good money. A nation’s economy tends to thrive when the population between 25 and 54 is significant and that demographic is willing to work. A second economic boost comes when the economy has a large number of experienced and skilled workers between the ages of 35 and 54. DEMOGRAPHICS ARE FAVORABLE Millennials (a.k.a. Gen Y) are the largest generation in the United States. In 2023, Millennials are between 27 and 42 years old, which means the entire generation is in the prime working years window (25 to 54). A second boost comes from Millennials that are in their peak earning, spending, and investing years (35 to 54). Between 2031 and 2035, 100% of Millennials will be in the peak earnings, spending, and investing window, which is similar to the very favorable 1995-2000 economic window when the median age of the Baby Boomers was 42.5 years old. Today’s largest generation, the Millennials, will be in a similar “demographic sweet spot” (median age of 42.5) between 2028 and 2034, telling us to remain open to better-than-expected economic and market outcomes between now and the end of 2034. 2023 REFERENCE POINT The demographic comparison above speaks to the 1995-2000 and 2028-2034 windows. Since 2028 is still five years down the road, it is helpful to examine the period preceding 1995-2000. The median age of the largest generation in the United States between 1988 and 1994 was 36. The chart below shows S&P 500 performance between 1988 and 1994 (see blue box). Today’s largest generation, the Millennials, will be in a similar “demographic sweet spot” (median age of 36) between 2022 and 2027, telling us to remain open to better-than-expected economic and market outcomes between now and the end of 2027. A ONE-TWO DEMOGRAPHIC PUNCH Some demographers break Baby Boomers into two subgroups; Boomers One (1946-1954) and Boomers Two (1955-1964). Boomers Two are also known as Generation Jones. Boomers One and Generation Jones created a double boom in the 1989-2000 window, when 100% of the massive Baby Boomer generation were in their prime working years between the ages of 25 and 54. As shown below, the stock market performed quite well in the double boom window. DOUBLE BOOM TWO A similar double boom is coming in the United States. Right behind the Millennials (1981-1996) is the also very large Generation Z, born between 1997 and 2012. In 2023, the entire Millennial generation is in the prime working age window (25-54) and that will be true until 2035, creating an economic and stock market tailwind that will be in place for the next 12 years. It gets even better; Gen Z is projected to overtake the massive Millennials in 2034. Thus, two exceptionally large generations in the United States are on the younger end of the spectrum. The oldest members of Gen Z are 26 years old in 2023, which means another very large generation is just entering the prime working years window (25-54). [Image] Here are Some More Investing Tips and Resources. Enjoy! Sponsored [Click here to get your FREE Trade to Win Playbook now!]( [Demographics: A Triple Economic Boom Is Coming]( THREE PRIMARY DRIVERS IN YEARS AHEAD In the next 10-15 years, the financial markets and economy will be significantly impacted by three major forces: (1) Millennials, (2) Generation Z, and (3) artificial intelligence. These forces could propel the secular bull market in stocks into the mid-2030s. DISTRACTED BY THE BABY BOOMERS While it is true Baby Boomers are aging (59-77), we should not lose sight of the extremely large, well-educated, and economically influential younger generations, Millennials and Generation Z (Gen Z). Millennials overtook the Baby Boomers in 2019 to become the largest generation in the United States, which means focusing solely on Baby Boomers does not provide much insight into positive generational offsets. Demographics provide insight into what is coming in the next 10-15 years, which is more important in the realm of investing than what happened in the last 10-15 years. Thus, markets are not focused on the current financial state of Millennials and Generation Z, but rather the inevitable progress they will make in the areas of income, home ownership, and wealth accumulation between now and 2035. As we march forward in time, the economic relevance of Millennials and Generation Z will increase every year and the economic relevance of the Baby Boomers will decrease. WHY DEMOGRAPHICS MATTER Having a large percentage of the population available to perform productive tasks is a key driver of economic growth, something that became painfully obvious during the COVID pandemic. As shown in the graph below, the prime working age population (25-54) declined between December 2007 and December 2012, a challenging period for the U.S. economy and stock market. When the prime working age population began to rise again in 2013, the S&P 500 was able to exceed the highs made in March 2000 and October 2007. After peaking in 2018, the prime working age population bottomed out near levels seen at the 2007 peak and began to rise again in late 2021. Thus, the trend in this key labor metric is favorable in 2023, which partly explains the resiliency of the U.S. economy. The graph below shows the population of the 25-54 age demographic. KEY WORKERS ARE AVAILABLE AND WILLING TO WORK Having a favorable trend in population does not necessarily equate to a population that wants to work. In the graph below, notice the 2020 COVID plunge in the age 25-54 labor participation rate, which was bad news for the U.S. economy. The good news is the key labor metric quickly resumed the favorable trend that began in 2015. In Q1 2023, the participation rate cleared the pre-COVID high, which means the labor market has improved significantly. The 25-54 labor force participation rate is above levels seen during the strong pre-COVID economic window. EXPERIENCE AND SKILLS ADD VALUE The second key metric that impacts economic growth is the quantity of workers with productive skills and experience, which is strongly correlated with earnings. Workers between the ages of 35 and 54 tend to be experienced and have a productive skill set that is in high demand. Thus, maximum career earnings logically fall in the age 35-54 window. Workers tend to spend and invest more when they are making good money. A nation’s economy tends to thrive when the population between 25 and 54 is significant and that demographic is willing to work. A second economic boost comes when the economy has a large number of experienced and skilled workers between the ages of 35 and 54. DEMOGRAPHICS ARE FAVORABLE Millennials (a.k.a. Gen Y) are the largest generation in the United States. In 2023, Millennials are between 27 and 42 years old, which means the entire generation is in the prime working years window (25 to 54). A second boost comes from Millennials that are in their peak earning, spending, and investing years (35 to 54). Between 2031 and 2035, 100% of Millennials will be in the peak earnings, spending, and investing window, which is similar to the very favorable 1995-2000 economic window when the median age of the Baby Boomers was 42.5 years old. Today’s largest generation, the Millennials, will be in a similar “demographic sweet spot” (median age of 42.5) between 2028 and 2034, telling us to remain open to better-than-expected economic and market outcomes between now and the end of 2034. 2023 REFERENCE POINT The demographic comparison above speaks to the 1995-2000 and 2028-2034 windows. Since 2028 is still five years down the road, it is helpful to examine the period preceding 1995-2000. The median age of the largest generation in the United States between 1988 and 1994 was 36. The chart below shows S&P 500 performance between 1988 and 1994 (see blue box). Today’s largest generation, the Millennials, will be in a similar “demographic sweet spot” (median age of 36) between 2022 and 2027, telling us to remain open to better-than-expected economic and market outcomes between now and the end of 2027. A ONE-TWO DEMOGRAPHIC PUNCH Some demographers break Baby Boomers into two subgroups; Boomers One (1946-1954) and Boomers Two (1955-1964). Boomers Two are also known as Generation Jones. Boomers One and Generation Jones created a double boom in the 1989-2000 window, when 100% of the massive Baby Boomer generation were in their prime working years between the ages of 25 and 54. As shown below, the stock market performed quite well in the double boom window. DOUBLE BOOM TWO A similar double boom is coming in the United States. Right behind the Millennials (1981-1996) is the also very large Generation Z, born between 1997 and 2012. In 2023, the entire Millennial generation is in the prime working age window (25-54) and that will be true until 2035, creating an economic and stock market tailwind that will be in place for the next 12 years. It gets even better; Gen Z is projected to overtake the massive Millennials in 2034. Thus, two exceptionally large generations in the United States are on the younger end of the spectrum. The oldest members of Gen Z are 26 years old in 2023, which means another very large generation is just entering the prime working years window (25-54). [Continue Reading...]( [Demographics: A Triple Economic Boom Is Coming]( And, in case you missed it: - [Linkfest: 28 July, 2023]( - [Some one will Make]( - [SBFC: See you in Court]( - [Jindal Steel & Power Vs Jindal Stainless – Financials, Future Plans & More]( - [Coinbase Advanced Trade Live on Coinrule]( - FREE OR LOW COST INVESTING RESOURCES - [i]( [i]( [i]( [i]( Sponsored [Exclusive Report: Master Uncertain Markets]( In the world of investing, uncertain markets can be downright terrifying. The fear of losing your hard-earned money can keep you up at night, and the anxiety of not knowing what tomorrow holds can be overwhelming. But what if you could take control of this uncertainty and turn it to your advantage? 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