Boomers & Recessions

Article Excerpt

Recently a friend asked, “What do you think of the idea that as the baby boomers retire, they will cut way back on their consumer spending and that this will usher in a lengthy recession?” It seems to me that this is the kind of prediction you make when you take a narrow view of a wide topic. The oldest boomers are now hitting age 60 and have begun to retire. The most immediate impact here is to drive down the jobless rate, particularly in well-paid, high-level jobs that allow the luxury of early retirement. This is opening up strings of advancement possibilities for younger workers (as one gets promoted, it opens up a slot for someone lower down, and so on). This process tends to push up wages and salaries. Rising incomes and falling unemployment make people more confident about their personal future. A widespread, healthy sense of confidence is good for the economy, for two reasons. It spurs a healthy level of…

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