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Plus for Gen-X they are in what should be their peak earning and spending years but they are either saddled with debt or they are the new frugal. Plus there are fewer of them. So when you have fewer people who spend less than the larger generation before them, you get a natural drop off in spending, add in debt, taxes and fear, things don't look good.
I wonder if the Boomers will really spend less as they age, though. To a certain extent, they will be forced to because their incomes will be lower (since earnings peak for most people in their 50s).
But I think they'll spend more in old age than previous generations before them. They popularized the idea that life couldn't be fun unless you spent everything you had. So I hardly expect them to suddenly give up that kind of thinking in old age.
I wonder if the Boomers will really spend less as they age, though. To a certain extent, they will be forced to because their incomes will be lower (since earnings peak for most people in their 50s).
But I think they'll spend more in old age than previous generations before them. They popularized the idea that life couldn't be fun unless you spent everything you had. So I hardly expect them to suddenly give up that kind of thinking in old age.
Exactly, earnings peak, women are retiring at a fast rate now that the kids are leavng the house and they are worried about retirement.
The spending drop is not really noticeable on them, sure they buy cars every 5-7 years as opposed to 3. they buy less cloths then when they worked.
The noticeable part is when the kids leave, they don't need to buy all of the stuff that kids consume, they don't need as much new furniture as they id when there kids needed new beds as they age, etc.
Even if their overall spending drops 20%, that is a massive hit to the GDP.
Exactly, earnings peak, women are retiring at a fast rate now that the kids are leavng the house and they are worried about retirement.
The spending drop is not really noticeable on them, sure they buy cars every 5-7 years as opposed to 3. they buy less cloths then when they worked.
The noticeable part is when the kids leave, they don't need to buy all of the stuff that kids consume, they don't need as much new furniture as they id when there kids needed new beds as they age, etc.
Even if their overall spending drops 20%, that is a massive hit to the GDP.
I do see your point. But in some ways, less consumption would help our economy. For instance, the trade deficit might drop...and the trade deficit has been a drag on GDP for a while.
Don't get me wrong, in general, I'm very worried about the state of the economy. I worry a lot about how we're going to pay for Medicare & Social Security and service the interest on all the existing government debt we've racked up.
But I don't know that the Boomers retiring is going to be the end of the world. Even before the recession, the average retirement age had started to creep up. I think that will continue, which will also help to prop up Boomer incomes.
I do see your point. But in some ways, less consumption would help our economy. For instance, the trade deficit might drop...and the trade deficit has been a drag on GDP for a while.
Don't get me wrong, in general, I'm very worried about the state of the economy. I worry a lot about how we're going to pay for Medicare & Social Security and service the interest on all the existing government debt we've racked up.
But I don't know that the Boomers retiring is going to be the end of the world. Even before the recession, the average retirement age had started to creep up. I think that will continue, which will also help to prop up Boomer incomes.
Fewer dollars being spent will hurt everyone, if a boomer buys one less Dell for their kids it only hurts overseas for a small amount of that purchase. If that money was spent in the US it would help GDP, otherwise it hurts GDP, tax revenue and end retail business who sell the products
It is not so much retiring that is the problem, it is reduced spending after their late 40's. (when kids start to leave home on average)
Look at the CES (Consumer Expenditure Survey) spending peaks in the late 40's and drops after that. Their income will go to savings and debt, not consumption.
Also, look at many duel income boomers turn into one income as the kids leave home.
Lately, when I've been out to a restaurant, there are usually lots of other people there. And the new IPhone has set record sales. How can people afford these things if we're in a depression?
I wasn't that old during the recession in the early '80s, but I hear that the restaurants were dead during that time. What makes this different?
1. Not every single person in the nation is unemployed and bankrupt. The people buying the iPhones are arguably not the same people who are laid off for a year now.
2. Consumption is still significantly depressed from robust economic growth levels. Your perception based on looking around a local restaurant and reading about iPhone sales is pretty incomplete.
90% of Americans are still employed and many of those are starting to feel better about things and spending a little more.
Quote:
Originally Posted by ambient
1. Not every single person in the nation is unemployed and bankrupt. The people buying the iPhones are arguably not the same people who are laid off for a year now.
2. Consumption is still significantly depressed from robust economic growth levels. Your perception based on looking around a local restaurant and reading about iPhone sales is pretty incomplete.
Yeah, and you have to have AT&T for your provider, and their reception s*cks.
Honestly, I just don't get people (including my boyfriend, who also has an iphone) .
Their reception 'sucking' is based on what phone you have. I have always had outstanding reception and will be that one person who can get a signal when everyone else (with different phones and from all other providers) is looking around for one.
I guess I understand the iphone thing...but people sure have gotten annoying with them...they can't seem to put 'em down.
I wonder if the Boomers will really spend less as they age, though. To a certain extent, they will be forced to because their incomes will be lower (since earnings peak for most people in their 50s).
But I think they'll spend more in old age than previous generations before them. They popularized the idea that life couldn't be fun unless you spent everything you had. So I hardly expect them to suddenly give up that kind of thinking in old age.
No becasue if that is so they will have less to spend. But a large number including myself will be fine but right now hunkering down in thsi unceertainty. Much of the consuming wew see will start to end once thsoe governamnt payments stop and we see interest rates climb to control inflation. That is when the real test will come. But I don't see that soon as things are flat and not chnaging really.
I do see your point. But in some ways, less consumption would help our economy. For instance, the trade deficit might drop...and the trade deficit has been a drag on GDP for a while.
Don't get me wrong, in general, I'm very worried about the state of the economy. I worry a lot about how we're going to pay for Medicare & Social Security and service the interest on all the existing government debt we've racked up.
But I don't know that the Boomers retiring is going to be the end of the world. Even before the recession, the average retirement age had started to creep up. I think that will continue, which will also help to prop up Boomer incomes.
Boomer retirement will be a non event, because the majority simply cannot retire. Forty-one percent of workers ages 45 to 54 have less than $25,000 saved up for retirement. Many others refinanced their mortgages late in life and will not be mortgage free until their 70's or 80's. Most will opt to work longer to attempt to maximize Social Security benefits, but due to poor diet, alcohol, and obesity many will die before ever collecting a single check. The ones who do will put off by new laws that will ratchet up the age at which you can collect.
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