Posted on 08/20/2017 8:32:42 PM PDT by Lorianne
Every time the U.S. economy has seem poised to break out of its slow-growth, low-inflation trend, something has undercut its momentum.
The federal fiscal-cliff and debt-limit fights, an oil patch recession, the global financial market spillovers from China, and a pullback from peak auto sales all have taken a turn as the economic headwind du jour.
Yet what some have called "secular stagnation" or "the new normal" is largely about America — along with much of the rich world — turning gray. Aging has cut 1.25 percentage points from both trend GDP growth and the neutral real interest rate in the U.S. since 1980, with most of that coming since the early 2000s, according to Federal Reserve researchers.
So far, sluggish growth has been overcome by persistence. As the current economic expansion enters its ninth year, the jobless rate is at a 16-year low while the S&P 500 index and other major averages are up sharply so far this year. Yet GDP growth likely will continue to slow. Meanwhile, big institutional investors and policymakers increasingly worry about what lies ahead as an inevitable battle plays out over how to pay for massive retirement promises to baby boomers and how much to raise taxes on Gen Xers and millennials.
It won't help that today's slow growth may soon look like the good old days. David Doyle, North American economist at Macquarie Research, notes that the oldest baby boomers are in their 70s, when workforce participation rapidly dwindles. "Demographics will soon act as a severe constraint on potential output growth," Doyle wrote recently.
America aged gracefully early this century, with the working-age population (20-64) expanding much more than the senior population. But the tide shifted in 2012. Over the coming two decades, the senior population is projected to swell by 30 million vs. just 15 million for working-age adults.
In 20 years, the whole country will look like Florida — only older. Now 20% of Floridians are 65 and older vs. 15% for the country as a whole. Two decades from now, 21% of Americans will be seniors, according to Social Security Administration projections.
SNIP
Not in any theoretical sense. I would also say that the free-market is the best system out there. But the practical realities are that larger companies (in this case our customers) know that they have disproportionate power in deciding what they will pay for something.
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