Here are three investment conclusions from a major demographics study that we recently conducted. For further detail, click on FIND OUT MORE.
Age – Large Groups Entering New Life Cycle Stages Implies Big Change
The aging of the U.S. population is well understood, but the impact from gaps created by the Baby Boomers and the Echo Boomers is less fully appreciated. The big opportunities will be with seniors and young families, not teenagers or established families. Seek out companies that target the extremes. See which age cohorts have the best and worst prospects, and which retail stocks are most sensitive to these changes.
Income – Increasing Thrift Is Not Just Cyclical
With a declining percentage of the population in their peak earning years, we estimate that household income is likely to decrease by 3% in real terms over the next two decades. This should restrain growth in overall consumer spending, all else equal. Seek out companies that offer compelling value and avoid companies that depend on the U.S. luxury market. Find out which retailers will benefit and which will suffer.
Household Formation – Good News on the Horizon, But Only For Some
Household formation is currently in the demographic doldrums, but should improve considerably in the near future. Home ownership picks up as people enter their thirties, and the Echo Boomers are about to enter this new stage in their life cycle. Seek out companies that depend on existing home sales rather than new home sales or home price appreciation. Learn how to differentiate between the haves and have-nots.
