(This chart gives a clear view of the
Baby Boomer effect and appears to be signalling a repeat performance.
Source: Ciovacco Capital)
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
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.
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.
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
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
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
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:
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
"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
**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:
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."
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
**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
Just as in August 1979, when Business Week declared “The Death Of
Equities”, history seems to be repeating itself.
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:
(By KingDaddy, sources:
, Ciovacco Capital:
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.)