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History Suggests Years Of Economic Growth Ahead
Millions of Millenials enter workforce, already affecting data
- 2017 Dec/Jan #8-6

 

(This chart gives a clear view of the Baby Boomer effect and appears to be signalling a repeat performance. Source: Ciovacco Capital)


Current leading economic indicators hit levels not seen in years or even decades

December 1, 2017: Do you know or remember what happened to the economy when the Baby Boomer generation entered their main spending years? Let's look at the data we have in hand.

In 1982 the Baby Boomers were in the 22-39 age range and were entering the workforce and beginning their prime earning and spending years.
This led directly to higher demand for everything, from housing and goods and services to financial services, thus stimulating economic growth for the next 18 years. The DOW stock index during that period went on to gain 1335% in value.

The Millenial Effect
The Millenial generation, as of 2015, are now in the 18-35 age range and are, similarly to the history of the Boomer generation, right now entering their prime earnings and spending years.
More than one-in-three American workers today are Millennials (adults ages 18 to 34 in 2015), and that year they surpassed Generation X to become the largest share of the American workforce, according to new Pew Research Center analysis of U.S. Census Bureau data.

The milestone occurred in the first quarter of 2015, as the 53.5 million-strong Millennial workforce has risen rapidly. The Millennial labor force had the previous year surpassed that of the Baby Boom, which has declined as Boomers retire.

Also note, according to the Pew report, with its disproportionately large share of immigrants, and at an age of transition from college to the working world, the Millennial generation’s workforce is highly likely to grow even further in the near future.

In addition, a significant chunk of the Millennial population are 18- to 24-year-olds. These are the years when school and college-going are often center-stage, and as a result, labor force participation is suppressed. As the youngest Millennials get older, more of them will be looking for or getting jobs.


(Millenials overtake baby boomers as America's largest generation. Chart source: Pew Research Center, Apr 25, 2016)

Record Economic Indicators Signal A Change
Signs confirming this are manifesting all around us. Consider the following economic numbers from Fear & Greed Trader, one of this author's favorite solid sources for current economic activity:

**Consumer confidence rose to one of the highest readings ever recorded at 129.5. The best print since 2000.

**November Richmond Fed Manufacturing Index rolls in at 30 versus a consensus of 15. This is the highest level since 1993. The index was 6 a year ago.

**NFIB's October report on Small Business Optimism remained strong with a reading of 103.8 versus the prior month tally of 103. NFIB Chief Economist Bill Dunkelberg:
"Owners became much more positive about the economic environment last month, which suggests a longer-run view. In the nearer term, they are more optimistic about real sales growth and improved business conditions through the end of the year. The tight labor market got tighter for small business owners last month, continuing a year long trend. Fifty nine percent of owners said they tried to hire in October, with 88 percent of them reporting no or few qualified applicants. Hiring activity was particularly high in Florida and Georgia, as construction firms are still trying to meet higher demand caused by the recent hurricane."

**New Home Sales rose another 6.2% to 685k in October, much stronger than forecast and a 10-year best, after the 14.2% September jump to 645k (revised from 667k). The month's supply of homes fell to 4.9 from 5.2 (revised from 5.0).
Inventory remains the issue, and if it does not improve, the impact will be felt in future sales reports. Lawrence Yun, NAR chief economist:

"Existing inventory has decreased every month on an annual basis for 29 consecutive months, and the number of homes for sale at the end of October was the lowest for the month since 1999. Until new home construction climbs even higher and more investors and homeowners put their home on the market, sales will continue to severely trail underlying demand."

**Halfway through the fourth quarter, monthly data releases show real GDP growing at a 3%+ annual rate. If that holds, it would make for three consecutive quarters of growth at 3% or higher. Believe it or not, the last time that happened was 2004. The Atlanta Fed's Q4 GDPNow estimate now sits at 3.5%.

**Economic data has accelerated stronger in recent months with the U.S. and Europe leading the pack.

What Does The Stock Market Say?
This is just the beginning of effects to be felt from the new demographics boom. Based on headlines fearing market tops and imminent crashes around every corner, it is not clear whether the mainstream media has considered demographics data at all.
  Just as in August 1979, when Business Week declared “The Death Of Equities”, history seems to be repeating itself.

Consider the featured chart from Chris Ciavacco which shows that, despite all the media talk to the contrary, the stock markets have been in sideways consolidation for about 17 years.

The breakout from that box is obvious and is confirmed by the economic data currently available. As always, past performance is no guarantee of future results so one must remain open and flexible to changes in the data, however the probability for it to continue for several years based on both historical and current data is high.

"When a market makes a historic high, it is telling you something. No matter how many people tell you why the market shouldn't be that high, or why nothing has changed, the mere fact that the price is at a new high tells you something has changed." - Larry Hite, source: Stocks And The Wisdom Of Jesse Livermore: http://bit.ly/2yjxVwV

(By KingDaddy, sources: http://pewresearch.org , http://seekingalpha.com/author/fear-greed-trader/articles#regular_articles , Ciovacco Capital: http://tinyurl.com/demographicsvideo
Information in this article is educational only and is not to be considered investment advice. One should always do their own due diligence before making any investments.)

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