Monday, February 20, 2012

The Missing Demographics

"Don't Expect Consumer Spending to be the Engine of Economic Growth It Once Was." That is the title of an article published recently by the Federal Reserve Bank of St. Louis. The author, an economist, examines the importance of consumer spending to the economy and identifies five trends that will inhibit a consumer spending comeback:
  1. Lower wealth
  2. Stagnant incomes
  3. Tight credit
  4. Fragile confidence
  5. Looming reversal of stimulus
What's missing from the list? The demographic millstone that hangs around our necks. One of the primary reasons consumer spending played such a key role in our economy over the past several decades was the presence of the large baby-boom generation in the peak-spending age groups. Now boomers are aging out of the big spender years. Moving in is Generation X, a much smaller cohort and also the one most hurt by the Great Recession. This demographic shift alone guarantees that consumer spending will be sputtering for years to come.

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