America is getting older, but in the next 15 years, we could hit a sweet spot, where Baby Boomers spend down their retirement savings and younger workers take on debt to buy homes and cars
More than China or software, it's demographics that poses the deepest threat to the U.S. economy today. But despite widespread fears that the economy will calcify under an aging population, there are good reasons to think that we're in a unique and temporary demographic downturn. A grayer country could actually mean a stronger U.S. economy.
To understand why, you have to understand how one statistic has practically determined the course of the 20th century: The average age of the Baby Boomers. This was a huge, huge generation. This chart from the Census showing the U.S. population by age shows you just how much bigger they were than any generation before them -- and how the youngest generation will barely replace them.
After World War II, some economists feared the U.S. would suffer a deep and protracted slump. Instead, the 1950s and 1960s witnessed historic growth. We needed houses to shelter young Boomers, and public infrastructure -- roads and schools -- to support them. The 1980s boom wasn't Reagan Magic. It was the inevitable result of Boomers pouring into the labor force, settling down and starting families. Boomers entering their peak earning-, investing-, and home-buying years drove the stock market explosion in the 1990s and the housing boom in the 2000s.