When I read this article, on how the incomes of different age brackets have fared during the economic downturn, my immediate reaction was that of course the incomes of those 65 years old and older have risen relative to the incomes of other brackets. More in this age bracket are living on Social Security, pensions, savings, and investments than in other age brackets and all of these tend to decline less during economic downturns than employment. Greater unemployment among the younger age brackets mean that their average incomes fall.
But another thought occurred to me as well, this one having to do not with income but with wealth.
Quietly, hardly remarked upon, the greatest wealth transfer in human history has been going on for roughly the last twenty years. It is the transfer between the parents of the Baby Boomers and the Baby Boomers.
In general the parents of the Baby Boomers were born between roughly 1915 and 1935. In the natural course of events they began dying in numbers in the late 1980s or early 1990s and by 2020 nearly all will have died, leaving whatever remains of the wealth earned during their lifetimes to their children and grandchildren. I won’t bother tallying up the result but it’s obvious (at least to me) that’s the greatest transfer of wealth in human history.
I continue to wonder how much of the ups and downs of the economy can be attributed simply to demographics. Is it really a coincidence that housing prices peaked in 2005 or 2006? That’s when the oldest Baby Boomers turned 60.
A record that will soon be eclipsed by the transfer of wealth from the Generation X and Y and maybe even Z to the baby boomers.
Though it is important to note that while a lot of wealth might transfer there are still huge disparities in who is able to transfer wealth…
And I can’t help but wonder how long term wage stagnation and economic malaise will affect not the next generational transfer but the one that will occur after that one.
“I continue to wonder how much of the ups and downs of the economy can be attributed simply to demographics.”
Alot, IMHO. I believe I brought this to your attention in reference to a book by Harry Dent Jr. I don’t hold a brief for Harry Dent – he sounds like some Elliott Wave type guy. But data is data. And his book is chocked full of this type of demographic stuff.
As for the greatest wealth transfer, I’m open to the notion but would need to see data. That pre-baby boom era will have a problem in creating “the greatest wealth transfer” simply because they are Depression era people, and they are fewer in number than this baby boom rat going through the snake. Probably should look at per capita stats.
Interesting subject, though. Suppose its true, then what the hell are we doing letting SS and Medicare go broke on behalf of the BBers at the expense of Gen XYZ-ELOMENOP as Andy points out?
As I think I mentioned, I gave a speech at a high school honors society pointing out that they should have some skepticism about the adults in their lives — adults who are busily bankrupting them. The Boomers have had their hands in kids’ pockets since those kids were zygotes.
I am stunned to discover that I got something right vis a vis numbers. I’ve worried for many years that the great Boomer Age-Out and Die-Off would be trouble for housing. As Mr. Micawber might have said, Ten houses and eleven buyers, result happiness. Ten houses, nine buyers, result misery.
I expect also that the coming generations will pass on the McMansions. They live in virtual space which is boundless. Physical space will matter less. Even a small room seems bigger when you’re peering at the world through a computer monitor.
On a per capita basis, I believe Dave has posted data showing that the Boomers are far more in debt than previous generations as they head into retirement. My general sense is that the Silent Generation that preceded them were children during the Great Depression, so they were both affected by it and sheltered from it. The post-war era of prosperity encouraged Boomers to spend and borrow, while the Silent Generation took less risk.
I love the way Boomers like to talk about “the Boomers” whenever its anything bad, as though they weren’t a part of it.
And they aren’t called Generation Z. They’re Millennials.
If I’m reading you right you’re talking about the transition from a Model T to a DeLorean, the icebox to a refrigerator, the mainframe to a desktop.
I see that.
Oil.