Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24
How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - 17th Feb 24
Why Rising Shipping Costs Won't Cause Inflation - 17th Feb 24
Intensive 6 Week Stock Market Elliott Wave Training Course - 17th Feb 24
INFLATION and the Stock Market Trend - 17th Feb 24
GameStop (GME): 88% Shellacking Yet No Lesson Learned - 17th Feb 24
Nick Millican Explains Real Estate Investment in a Changing World - 17th Feb 24
US Stock Market Addicted to Deficit Spending - 7th Feb 24
Stocks Bull Market Commands It All For Now - 7th Feb 24
Financial Markets Narrative Nonsense - 7th Feb 24
Gold Price Long-Term Outlook Could Not Look Better - 7th Feb 24
Stock Market QE4EVER - 7th Feb 24
Learn How to Accumulate and Distribute (Trim) Stock Positions to Maximise Profits - Investing 101 - 5th Feb 24
US Exponential Budget Deficit - 5th Feb 24
Gold Tipping Points That Investors Shouldn’t Miss - 5th Feb 24
Banking Crisis Quietly Brewing - 5th Feb 24
Stock Market Major Market lows by Calendar Month - 4th Feb 24
Gold Price’s Rally is Normal, but Is It Really Bullish? - 4th Feb 24
More Problems in US Regional Banking System: Where There's Fire There's Smoke - 4th Feb 24
New Hints of US Election Year Market Interventions & Turmoil - 4th Feb 24
Watch Consumer Spending to Know When the Fed Will Cut Interest Rates - 4th Feb 24
STOCK MARKET DISCOUNTING EVENTS BIG PICTURE - 31st Jan 24
Blue Skies Ahead As Stock Market Is Expected To Continue Much Higher - 31st Jan 24
What the Stock Market "Fear Index" VIX May Be Signaling - 31st Jan 24
Stock Market Trend Forecast Review - 31st Jan 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

The Middle Class Might Nearly Disappear in the Next Decade

Politics / Demographics Mar 09, 2018 - 10:13 AM GMT

By: John_Mauldin

Politics

Patrick Watson: At the Strategic Investment Conference 2018, Karen Harris from Bain & Company gave a thought-provoking keynote titled, “Labor 2030: The Collision of Demographics, Automation, and Inequality.”

She sees a big economic shift that began in the 1980s. Driven by demographics and automation, the world is gradually moving from a supply-constrained to a demand-constrained economy.

Harris said the combination of a demographically shrinking workforce and increasingly cost-effective automation will aggravate inequality, curb demand, and put a cap on economic growth.


This will have massive social and financial implications in the next decade.

Low-Wage Workers Will Be Hit Most

The impact of automation will be unequal.

High-wage workers will reap most of the gains and low-wage workers will bear most of the cost—at least in the short run. This is socially unstable. But in the end, it's not even helpful to the businesses that automate.

Someone has to buy the goods robots produce. As the middle and lower classes suffer, spending will decline. The result will be “demand-constrained growth.” This isn’t necessarily a contraction, but it will likely limit GDP growth.

Source: Mauldin Economics

Harris thinks that technology’s impact on demographics and life spans won’t help us. She doesn’t foresee life spans increasing fast enough to reverse or cushion the ominous trends.

Source: Mauldin Economics

This Is Just the Beginning

Harris thinks rising inequality has only just begun.

It will get much worse and not just in the US. Many won’t initially notice because rising productivity will mask some of the job losses. But eventually, job losses will overwhelm productivity.

She called this the “wild coyote” moment. It’s hard to pinpoint, but probably coming in the next decade.

Now is no time to follow market momentum, Harris said. It is a massive boom similar to the dot-com and housing bubbles combined. And the reversal will be tough.

Another profound implication will be declining consumer spending.

The growth of spending by Baby Boomers will begin to decline in the 2020s. Now add in the growing inequality with up to 25% of the workforce displaced by automation, and the middle-class markets seem to disappear.

Investors and businesses should be asking, "Who will be my customers a decade from now?"

Get Live Updates from the Strategic Investment Conference 2018

Learn from 25 top financial experts, best-selling authors, and investment professionals as they discuss their best investment ideas and predictions for the economy, financial markets, and geopolitical relations. Tune in to the SIC 2018 live blog now!

John Mauldin Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in