“Buy stocks until 2011, and then buy Depends.”
– Eat the Rich, P.J. O’Rourke (1999)
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:
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.