I’ve previously noted the optimism of blogger Bill McBride (aka, Calculated Risk) about the medium- and long-term prospects for the U.S. economy.
McBride is no sunny ideologue — some even thought him a cynic back in 2005 when he started the blog and predicted the housing bust and financial crisis.
McBride is just looking at the numbers and drawing logical conclusions.
In yesterday’s post The Future is still Bright!, he notes clear reasons for optimism about the economy over the next few years:
It still appears economic growth will pickup over the next few years. With a combination of growth in the key housing sector, a significant amount of household deleveraging behind us, the end of the drag from state and local government layoffs (four years of austerity mostly over), some loosening of household credit, and the Fed staying accommodative (even if the Fed starts to taper, the Fed will remain accommodative).
His optimism for the coming decades relies largely on demographic projections. Right now, we have a bubble of people — the baby boomers — moving out of the workforce and into a very expensive old age that will put all sorts of strain on the economy. But then we see those demographics shift. People will still be living longer, but those older cohorts will not be the largest in the population. From McBride:
And in the longer term, I remain very optimistic too. I mentioned a few long term risks in my January post, but I also mentioned that I wasn’t as concerned as many others about the aging of the population. By 2020, eight of the top ten largest cohorts (five year age groups) will be under 40, and by 2030 the top 11 cohorts are the youngest 11 cohorts. The renewing of America was one of the key points I made when I posted the following animation of the U.S population by age, from 1900 through 2060.
Here’s that animation, with population in millions along the y axis:
There’s much more data and numerous other graphs in this post at Calculated Risk.