I agree with you that a lot of it is population issues. A lot of America’s economy has always been based simply on growth. One I look at is real estate. In Japan in 1989 the average dwelling sold for something like 420,000$ USD. In 2006, seventeen years later it sold for 220,000$ USD.
Great for young Japanese who want to own a home.. not so great for major land owners and banks who want to finance and collect interest for the next 30 years.
But still that sub-replacement population thing has to be a factor...
Good point on the Japanese. I have to go OT for a moment...I wonder how their salaries increased in proportion to their realty prices?
The critical factor in the US markets is that the salaries have not increased in proportion to the cost of living/housing prices.
No way could local salaries sustain the cost of a home without outside buyers coming into the market with cash, or multiple investors cooperating on a speculative purchase.
I can only deduce that the dramatic reduction in the Japanese market was due to the same conditions. In the US market, however, we can still anticipate an influx of outside buyers, foreign or otherwise. Moreso than the Japanese could.
But the difference is the bubble in that market. I suspect our adjustment will be somewhat softer than the one the Japanese experienced except for those who stretched themselves beyond reason.
Just yappin'... now stop making me think. : )
Productivity equals wealth and to first order a nation's (or business') economic productivity is its manpower, that is, more people is more productivity. If we make sharp and sudden decreases in our national labor force, we can expect sharp decrease in productivity and wealth.