The Baby Boom generation has been described as the pig in the python, meaning there were fewer people before and fewer people after this group, which has a lot of economic consequences. Start with staffing in the tax and accounting business.
It’s fairly well accepted that as Baby Boomers retire, there are fewer candidates to take their places. The basic law of supply and demand dictates that puts pressure on salaries.
But shouldn’t this apply to the general economy as well? For example, it’s being equally accepted that until the American housing market recovers, the economy will limp along as prices continue to sag. Because if there are fewer people who are buying houses at the entry level and on up, then there’s less demand.
There’s a lot of greater minds than mind in economics and I haven’t seen this factor discussed. So maybe I’m way off base. However, my belief has been it was the demand from the Baby Boomer generation that created the housing bubble. There were more people and the Baby Boomers, and the World War II generation before them, also learned that they could finance an increasingly affluent life style through the never-ending appreciation of housing prices.
Anyone in the suburbs can daily see the impact—increasingly larger buildings with homes that are becoming more than the average person can ever need with the credit that made this possible coming more from the next buyer than from a commercial lender. This factor also gave many homeowners the ability to get home equity loans that also paid for much of their life styles.
The retirement of the Baby Boom may spell an end to this. It’s not that we are doomed to years of slump, but that the ability to ride the housing market upwards to bigger and bigger dwellings is probably at an end, at least until the members of the rebound boom, just starting to enter college, hit their home-buying years.
And maybe in that time, we’ll learn how to leave more reasonably.
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