President Trump has a "huuuge" opportunity.
During his time in the Oval Office, the economy will likely be a big beneficiary and get a significant boost from a very basic (yet important) driver of U.S. growth: demographics.
The Millennial generation is just now aging into peak consumption years. This will plug a gap that's been a huge drag on growth since 2009.
Population growth matters
#Demographics #Trump #Europe #Japan
According to Pew Research, Millennials are defined as those ages 20-36 in 2017. There are a grand total of 75.4 million Millennials, now surpassing the 74.9 million in Baby Boomers (ages 53-71).
Our research suggests that halfway through Trump's term, at the beginning of 2020, the number of Millennials reaching the key consumption threshold of 35 to 54 years old will begin to add to U.S. economic growth. As you can see in the Chart of the Day below, growth in this age bracket bottomed under President Obama and will accelerate through 2025.
By way of contrast, greying populations in Europe and Japan will experience negative growth in this age bracket over the next ten years. Japan, in particular, will be hardest hit. The issue will actually accelerate over the next decade, as the population of 35-54 year olds falls -2% growth by 2025.
Demographics: Why Extraordinary Monetary Policy Failed
#Fed #BOJ #ECB
This is largely why fantastical monetary policy experiments (from quantitative easing to negative interest rates) enacted since the financial crisis of 2008-2009 have largely failed. Demand-based quantitative easing was predicated on the idea that if central bankers just printed more money, Americans, European and Japanese consumers would go out and spend it.
The critical component missing from central banker's calculations: There needed to be more consumers willing to spend. As 35-54 year old populations fell around the globe, it was logical that consumption would fall too.
Therein lies Trump's Opportunity
Now that these slow-moving demographic icebergs are shifting, the Trump economy could get a lift. That assumes, of course, that some largely unforeseen foreign policy woe doesn't derail these already improving trends (click here and here for more). Time will tell. But, for now at least, the trend bodes well for "Making America Great Again."
