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Saturday, April 2, 2016

Ominous Population, Job, & Housing Trends

Since '00, the core population of 25-54yr/olds has risen by 4.6 million (4%) and full time jobs among them have declined by a half million (-0.5%). The recession decimated the 25-54yr/old core population and this segment has yet to even return to '00 levels of full time employment let alone 2008 peak employment.

Since '00, the population of 55+ Americans has grown by 27 million (+45%) and full time employment among this segment risen by 10 million (+93%).  A large swath of boomers did not and have not retired maintaining existing or establishing new full time work.  Theoretically, they are willing to work for less to maintain medical benefits and bridge shortcomings in their retirement savings.

What about those deemed "not in labor force"?  Clearly, a large portion of this 24 million (+35%) surge since '00 is coming from the worst possible source, the 25-54yr/old core of the population...not just boomers retiring.  The impact of missing job skills, savings, etc. among the core will be felt for decades to come.

What about the growth in new home ownership vs. the growth in full time jobs (hard to be a homeowner if you haven't a full time job)?  The chart below shows since '00, the growth in new homes has been nearly equal to the number of full time jobs created (a complete reversal from the previous 40 years)...and based on the above chart, on a net basis, none of the growth in homeownership has been among the 25-54yr/olds.  That means the 11 million new homes (net) have been purchased by the 55+yr/old growing population / growing full time employment base.   Record rental income is the new source of cash flow for retirees with means, who have given up on bonds yielding next to nothing and become landlords with large portfolios of rentals...and soaring housing prices alongside declining wages will ensure young can't buy the homes they live in and instead offer the boomers lifetime renters (the new serf class).  All thanks to the Federal Reserve's plan to financially engineer America to ensure the minority class of asset holders never get caught holding the bag at the expense of the vast majority holding nothing!

The implications of this generational shift are massive and worthy of a deeper exploration on another day.

All data is via OECD and Fed's FRED and is the most current data available.

Extra Credit: Why CB's will never "normalize" and only take more brazen steps going forward (chart below) population growth is ceasing (from the bottom up) and nearly all population growth is simply the old living longer.  This will only get worse.


  1. Chris, I don't see how current state of the economy can be explained any more clearly. This analysis speaks to the most basic foundations of the economy. As you have pointed out in the past, and as I have come to firmly believe, ZIRP and QE will continue as a matter of National Security, for if the world's central banks/Federal Reserve allowed the economy to find its true level of equilibrium, there would be massive civil unrest across the globe. Until the population of the 55+ segment has died off to a significant percentage of the total population, artificially inflated economy will be maintained at all costs. I feel bad for the youngest of the boomers (those born '60-'64) as I think they will be left without a chair when the music stops and will experience the larges 'disappointment gap' between what they thought their assets were worth versus what they actually receive toward the end of their lives.

  2. Hoping for a rebalancing of the economy is not all 'doom and gloom'--it's part of the natural cycle. I love to imagine the 1980 eruption of Mount St. Helens as an analogy for how the world's economy should function. It always amazes me how the landscape around the eruption has recovered since '80 (captured in sequence from NASA satellite images):
    And so it will be with the economy--from unsustainable pressure build up to violent eruption to widespread devastation to slow, steady recovery to once again verdant vibrancy!

    1. that may be true but how to you think the trees around St. Helens felt after the eruption?


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