Previous posts in this series:
Mike Shedlock took a look at the graph of the civilian participation rate above and observed:
The massive increase in the participation rate between 1960 an 2000 is a result of single wage-earner households going to dual wage-earner households (both husbands and wives working), a decrease in average family size, and other boomer related dynamics.
Now, as boomers head for retirement we can and should expect the participation rate to decline. However, I took that into consideration with my estimate that it takes 100,000 to 125,000 jobs a month to keep up with birth rate and demographics. In 2000, the number was close to 150,000 a month.
Bernanke’s estimate is 100,000 jobs a month. However, I think he is slightly low-balling for obvious reasons. Regardless, we are both in the same ballpark.
In all honesty that comment was the observation around which this series was built, the tiny bit of grit around which it grew layer by layer.
Returning to my remark in The Breakdown: Baby Boomers Have Higher Incomes, the year 2006 as the beginning of a sharp decline in household real estate values as a percentage of GDP is no coincidence. It marked the year in which the oldest Baby Boomers turned 60.
I don’t recall who pointed it out but somebody once wisecracked that life in America today could be summarized as spend, spend, spend, spend, save, SPEND, die. That’s obviously true, it’s been the foundation of our economy for a half century, but it hasn’t always been true. There have been other models:
- Spend, save, save, save, save, die.
- Spend, spend, save, save, save, save, die.
- Spend, save, spend, save, spend, save, spend, die.
- Spend, save, spend, save, spend, save, die.
That last is the model that my parents followed by the way.
In the coming years the group born between 1946 and 1964 can be expected to buy fewer houses and less stuff generally, and, possibly, save a bit more. Then we can expect them to start spending more on healthcare.
In my last post in this series, The Breakdown: the Wrap, I plan to discuss a few of the implications of the changing economic role of the Baby Boomers, the new environment faced by those who come after the Baby Boomers, and the implications for policy.