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April 16, 2006
P.J. O'Rourke's Revenge
"Buy stocks until 2011, and then buy Depends."Retiring boomers are going to slow economic growth even more than already expected over the next decade, according to a soon-to-be-released Federal Reserve study:
-- Eat the Rich, P.J. O'Rourke (1999)
The study projects a slower pace of work force growth than most economists now forecast, suggesting the economy cannot keep growing at the present-day pace without generating pressure for higher wages and inflation. To prevent that, the Fed will have to enforce a lower speed limit on the economy by pushing up interest rates.
The study suggests that growth over the next 10 years will average less than 3 percent, instead of the 3.3 percent of the last decade, economists said. A 0.3 percentage point difference in growth in the $12 trillion U.S. economy translates into $360 billion over 10 years, equal to the size of Switzerland's economy. Non- farm job gains, which averaged 200,000 a month in the 1990s, may be half that.
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