America’s load of old people — already large and getting larger — could spell shrinkage for the economy, according to an analysis by Lombard Street Research reported by the Financial Times.
As the first wave of baby boomers turns 65 next year, many of them will be unable to retire, because their main sources of wealth — their homes and their financial asset portfolios — have been decimated. They’ll keep their jobs, crowding young people out of employment opportunities and driving down wages. And they won’t spend money, weakening consumer demand and exacerbating the problem. But it could be worse, says the report. We could be Japan:
As there are few reasons to expect significant strength in the US economy as long as savings-glut countries are preventing adequate effective dollar devaluation, yet private-sector debt deflation persists, a period of as much as five years of falling CPI is not out of the question. The vigour of the US supply side and the flexibility of its economy do not, however, make this situation comparable with the entrenched deflation of Japan – though many will say so!
So, in the name of American prosperity, we implore our elders. Retire! Enjoy your declining years! Spend your money! The future of our unemployed youth is in your hands. And to help them, you only need to do the easiest thing in the world to do in 2010 — lose your job.
