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The blog in Barron’s

Economic growth
By Paul Hodges on 23-May-2013

Barron's.pngBarrons, the leading US investment magazine, recently published a major cover story analysing the potential impact of the Millennial generation on the US economy. These are the young people now aged between 18 to 37 years, who are starting to enter their Wealth Creator years.

Barron’s noted they currently account for $1.3tn of consumer spending, commenting:

“This echo-boom generation totals 27% of the U.S. population, less than the 35% the boomers represented at their peak in 1980. When the baby-boom generation drove the economy in the 1990s, growth in gross domestic product averaged 3.4% a year.”

The article is an important discussion of the role of demographics in driving economic growth. The blog thus added its own thoughts, which Barron’s have kindly printed as their lead letter:

Population Problems
To the Editor:

Demographics are certainly destiny, as you highlight in the April 29 Cover Story, “On the Rise.” But the 86 million Millennials are unlikely to recreate the strong growth seen in the 1980s and 1990s. Unlike their boomer parents, they start with the collective headwind of $1 trillion in student debt. Plus, their taxes will have to repay the additional trillions of government debt that have been borrowed in recent years.

“Also, increased life expectancy means Millennials’ parents are mostly still alive. So their increased spending is going to be balanced by the lower spending of 80 million boomers now entering retirement. Sadly, it is wishful thinking to imagine the Millennials can create another boomer-style supercycle against these major headwinds.

Paul Hodges