A couple of years ago, the phrase “Thanks Boomer!” was an insult. Younger generations liked the idea of a scapegoat for global warming and piles of government debt.
My kids didn’t care that I was born in 1965, missing the Boomer cutoff by a year. “Thanks for bankrupting social security, Boomer,” they said.
The fact is, if you’re a Baby Boomer who’s retired from the workforce over the last decade, the U.S. economy owes you a big “thank you. “ And not the condescending one either. A very sincere “thank you” — because you helped keep the U.S. economy out of recession last year.
Coming into 2023, inflation was raging and the Fed was hiking interest rates at a record-setting pace. The consensus among economists was just about universal: the U.S. economy would experience a recession in 2023…
Because that’s what interest rate hikes are designed to do: choke off hiring and raise unemployment so that consumer spending falls. The only real question was: how bad would the 2023 recession be?
Turns out, that was a trick question. Nobody saw the resilience in the U.S. economy coming – probably because they were looking in the wrong place.
Economists take their cues from the labor market. They don’t pay much attention to the number of people who have retired and left the workforce. And it’s exactly that kind of paint-by-numbers economic forecasting that continues to leave most economists guessing.
Just look at the March employment report that came out last Friday. Economists were pretty sure that the U.S. economy probably added 214,000 jobs in March. Nope. the actual number of newly employed was just over 300,000.
It’s hard to express just how wrong the economists were. They weren’t even in the ballpark. It’s like they were looking at the data from a different country, instead of the U.S. And it’s been this way for nearly two years.
Well, I have a suggestion for any economists out there: pay attention to the Boomer generation.
How the Boomers are Changing History
The Baby Boomers are the second biggest generation the U.S. has ever seen – 69 million people born between 1946 and 1964.
However, they are also the wealthiest – at the end of 2023, Boomer household net worth hit $76 trillion. That’s half of the household net worth of the entire United States – $156 trillion at the end of 2023.
The Boomers started hitting retirement age in 2011. Since then 46 million Boomers – around 65% – have retired and left the job market. Of course that’s opened up space for the rest of us.
The boomers retiring has opened up so much employment that the U.S. job market has been running at a deficit – available but unfilled jobs have run at around 2 million for a couple of years.
But to see how the Boomers are driving U.S. economic growth, we just have to go back to Friday’s blowout employment report.
Fully half of the 300,000 jobs that were added in March were service jobs: healthcare, leisure, and hospitality. And that’s been the trend for a while now.
The takeaway here is pretty clear: the wealthiest generation the U.S. has ever seen is enjoying their retirement. They’re taking cruises, going out to eat, and visiting their doctors.
And as the biggest group of stock owners, the strong stock market is feeding this virtuous cycle.
I was born in 1965. As a charter member of Generation X, let me just say: Thanks, Boomer! I mean that sincerely…
Briton Ryle
Chief Investment Strategist
Outsider Club
X/Twitter: https://twitter.com/BritonRyle
