When your kids look back on the “lost decades” from 1990 to 2020, one of the greatest stories they’ll talk about is what we call “The Demographic Cliff”… that is what happened when a smaller generation followed a larger one for the first time in modern history. Yes, you read that right.
Not larger, like many idiot-as-usual-experts like to say. They claim the Echo Boom generation is even larger than the Baby Boom that preceded it.
To borrow a line from Jim Cramer: “They know nothing!”
Japan was the first wealthy country to go off this demographic cliff…
Its stocks peaked in late 1989 and they’re still down close to 80% more than two decades later. And Japan’s demographic spending trends only get much worse for decades to come.
Japan will never be a rising power again. Its Nikkei stock market will never get even close to 39,000 again… 20,000 would likely be the upside, if that, for decades to come.
Its real estate peaked in 1991 and is still down over 60%. And our analysis of dying Baby Boomers versus rising Echo Boomers says real estate will never really come back in Japan. In fact, it’s likely to go even lower!
Japan will never be the same again… nor will the U.S…. or one European country after the next… or Singapore… or South Korea… or even China (although China’s demographic cliff is not as severe due to still rising urbanization).
Even emerging countries will face this demographic cliff one after the next from 2040 onward, with the world population from continued emerging world growth peaking between 2065 and 2070 and then declining for the first time since the last ice age!
That’s what happens when a smaller generation follows a larger one. Economies can never be the same again… unless there is a revolution in biotech that allows us to age dramatically slower and have kids much later as well. (We do actually expect that to happen, and you can read the details here, but that’s decades away.)
You see, young people drive innovation as they enter the workforce. Then they drive spending as they raise their families. Then they drive wealth as they age into retirement. So when a smaller generation follows a larger one, innovation declines first… then economic growth… then stocks… then real estate…
The crucial question is, why do many experts say that the Echo Boom generation in the U.S. (and in other developed countries) is larger than the Baby Boom?
Quite simply, because they’re not looking at the whole picture!
Yes… the number of Echo Boomers in the U.S. is larger than the number of Baby Boomers. However, and this is a big “but,” they are spread over a much larger time frame. That means there isn’t a new pig trying to squeeze through the python.
Look at this birth index, which I’ve adjusted for past and future projected immigrants as if they were born here.
Baby Boomers were born from 1937 to 1961 – a 24-year period.
The Echo Boomers were born from 1976 to 2007 – a 31-year period.
The Baby Boom was a four foot wave that surged through the economy. The Echo Boom’s birth rates, even adjusted for immigrants, never even came close to hitting the same heights as the Baby Boom generation did.
The birth trends are also more off and on, rather than straight up. And as we predicted decades ago, the economic decline from the peak of the Baby Boom’s Spending Wave would cause births and immigration to slow after around 2007 (that has already clearly been the case). So, future demographic trends beyond the Echo Boom are likely to be even lower.
All of which means that when the Echo Boomers move into their peak spending years from 2023 forward, there will be less workers, fewer new marriages and households, fewer kids, fewer peak home buyers, fewer spenders, borrowers and investors.
Echo Boomers will stay in their peak spending years for longer than the Baby Boomers did, but that’ll do nothing to change the number of spenders.
So don’t listen to “experts” who try to spin demographics in ways to create a positive message or something they want to promote. The Echo Boomer generation is NOT going to be our saving grace, although they will generate more positive trends a decade from now.
Instead, listen to us. We are the experts on demographics trends, from the micro to the macro levels… from cradle to grave.
Demographics do give you the best long-term leading indicators for most of the critical trends that will impact your life, your business and your investments over the rest of your lifetime. But you need to see the reality. Not fuzzy numbers.
We’ll keep telling you the truth about demographics and the future they dictate. You can just ignore the B.S. you hear on the news.
Ahead of the Curve with Adam O’Dell
It’s not just the U.S. that’s about to lose its main engine of growth – a large demographic group of peak spenders.
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