Helping you navigate the new normal
It is time for the central banks to give up their outdated economic models, and focus instead on the science of demographics. Their efforts to create economic growth by ‘printing babies’ have simply created a debt bubble. This will likely now burst as Evergrande goes bankrupt.
A year ago, many were suggesting the lockdowns might produce a “baby boom” as couples spent more time together. But early data suggests the world is instead seeing a “baby bust”. As Nikkei Asia reports: “Births (in December/January) have fallen between 10% and 20% in such countries as Japan, France and Spain — and even
The post Pandemic leads to ‘baby bust’ as births decline in most countries appeared first on Chemicals and the Economy.
Another 3 months, another decline in global smartphone sales. And more pressure on mid-market players like Samsung, as China’s low-cost producers continue to gain market share. As the chart shows: Samsung had 35% of the global market back in 2013, but was down to 23% in Q3 Its annualised volume fell to 262 million from
It is now 8 years since John Richardson and I published our 10-year forecast for 2021 in Boom, Gloom and the New Normal: How the Western BabyBoomers are Changing Demand Patterns, Again’. Remarkably, its core conclusions are very relevant today, as the summary confirms. Unfortunately, as we feared, policymakers refused to junk their out-of-date models,
Nearly a third of the the world’s High Income population are now in the Perennials 55+ generation. Yet companies mostly ignore their needs – assuming that all they want are walking sticks and sanitary pads. Instead, they continue to focus on the relatively declining number of younger people. No wonder many companies are going bankrupt, and
If a country doesn’t have any babies, then in time it won’t have an economy. But that’s not how the central banks see it. For the past 20 years, through subprime and now their stimulus policies, they have believed they could effectively “print babies”. Even today, they are still lining up to take global interest
Women in most parts of the world are not having enough children to replace our population. This is one of the great issues of our time, but is hardly ever discussed. Yet the issue is very topical, with Chinese births falling to a 60-year low last year. Only 15.23 million babies were born, the lowest
“The 1950-2000 period is like no other in human or financial history in terms of population growth, economic growth, inflation or asset prices.” This quote isn’t from ‘Boom, Gloom and the New Normal: How Western BabyBoomers are Changing Demand Patterns, Again‘, the very popular ebook that John Richardson and I published in 2011. Nor is […]
The post Boomer SuperCycle unique in human history – Deutsche Bank appeared first on Chemicals & The Economy.
It’s 10 years since my forecast of a global financial crisis came true, as Lehman Brothers collapsed. I had warned of this consistently here in the blog, and in the Letters column of the Financial Times. But, of course, nobody wanted to listen whilst the party was going strong. As the FT’s world trade editor wrote […]
The post Why everyone ignored my warnings ahead of the financial crisis appeared first on Chemicals & The Economy.
The Financial Times has kindly printed my letter as their lead letter, arguing that the rise of the populists emphasises the risk of continuing to deny the impact of today’s ageing populations on the economy. Sir, Martin Wolf’s sobering analysis of policymakers’ post-crisis decision to “go back to the past”, ( “Why so little has changed since […]
The post Financial crises and the five stages of loss appeared first on Chemicals & The Economy.
Is global economic growth really controlled by monetary policy and interest rates? Can you create constant growth simply by adjusting government tax and spending policy? Do we know enough about how the economy operates to be able to do this? Or has something more fundamental been at work in recent decades, to create the extraordinary […]
The post Time to recognise the economic impact of ageing populations appeared first on Chemicals & The Economy.
The results of the central bankers’ great experiment with money printing are now in, and they are fairly depressing, as the charts above confirm: On the left are the IMF’s annual forecasts from 2010 – 2018 (dotted lines) and the actual result (black) Until recently, the Fund was convinced the world would soon see 5% […]
The post The tide of global debt has peaked: 8 charts suggest what may happen next, as the tide retreats appeared first on Chemicals & The Economy.
As promised last week, today’s post looks at the impact of the ageing of the BabyBoomers on the prospects for economic growth. The fact that people are living up to a third longer than in 1950 should be something to celebrate. But as I noted in my Financial Times letter, policymakers are in denial about the importance of […]
The post West’s household spending heads for decline as population ages and trade war looms appeared first on Chemicals & The Economy.
Rising life expectancy, and falling fertility rates, mean that a third of the Western population is now in the low spending 55-plus age group. Given that consumer spending is around two-thirds of the economy in developed countries, the above charts provide critically important information on the prospects for economic growth. They show official data for household […]
The post West faces “demographic deficit” as populations age appeared first on Chemicals & The Economy.
“Will economists start to consider demographics when making their forecasts and developing government policies?” This was the question on my mind at a recent discussion on the topic of “An economy that works for everyone” at the UK’s Institute for Government. The speaker was the Chief Economist of the Bank of England, Andy Haldane, and the Institute’s […]
We are living in a New Normal world. Populists such as Nigel Farage, Donald Trump, Marine le Pen and Beppe Grillo are gaining support as economic growth slows and social/political unrest becomes common. My presentation at our annual conference last week in Vienna highlighted some of the key issues, as Jessie Waldheim of ICIS news […]
Nearly two-thirds of people in the world’s top 25 countries feel their country is heading in the wrong direction, according to a new poll from Ipsos MORI. As their chart shows: China, Saudi Arabia, India, Argentina, Peru, Canada and Russia are the only countries to record a positive feeling The other 18 are increasingly desperate […]
The Financial Times has kindly printed my letter below, welcoming the Fed’s decision to address the impact of demographics, but arguing that it needs to focus on demand issues, given the impact of today’s ageing populations. Sir, It is good to see the US Federal Reserve is finally beginning to address the impact of demographics […]
Last week as the BBC reported, Bank of England Governor, Mark Carney, explained to an audience in Birmingham that the Bank had saved the UK economy after the Brexit vote in June: “Between 400,000 and 500,000 jobs could have been at risk if the Bank had not taken action after the referendum, he said. ”We are willing […]
The world’s 4 main central bankers love being in the media spotlight. After decades climbing the academic ladder, or earning millions with investment banks, they have the opportunity to rule the world’s economy – or so they think. But their background is rather strange preparation to take on this role – even if it was […]
2015 data is now available for births in the G7 countries, responsible for almost 50% of global GDP. It confirms the picture of a steadily aging population. This has enormous implications for the economy, as older people already own most of what they need, and their incomes decline as they move into retirement. As the […]
Employment income is critical for most Americans and for the US economy. The above chart shows how the key factor – the participation rate – has changed since records began in 1948. It shows July data, to avoid the need for seasonal adjustment, split by Men, Women and Total: □ Last month’s Total rate was 63.4%, versus the […]
First, the good news. It has long been recognised that the UK economy is over-dependent on financial services, and that its housing market – particularly in London – is wildly over-priced in relation to earnings. The Brexit vote should ensure that both these problems are solved: Many banks and financial institutions are already planning to […]
200 years ago, most blog readers would have been dead at their current age. Life expectancy in the West was just 34 years in 1820, and averaged only 24 years everywhere else. Today, as the chart shows, Western life expectancy has risen to 79 years (red area). In the the emerging economies, it has nearly […]
Too many policymakers, companies and investors are continuing to ignore the dramatic changes taking place in the age profile of the global population. Yet common sense tells us these must have a major impact on the economy. The impact comes from 2 equally important developments: One is the rise in the number of people in the New […]
The blog’s analysis about the inevitability of slowing demand and deflation was warmly received at Euromoney’s latest Global Bond Investors’ Congress. Far fewer of this year’s attendees still believed that central banks could return the Western economy to SuperCycle growth levels. Thus its concept of the 3 Normals received a most enthusiastic response. This week has seen even greater interest develop […]
The ageing BabyBoomers are now leaving the suburbs in large numbers, and moving back to the cities, as the blog discussed in October. Thus as the Wall Street Journal reports, housing needs are changing quite dramatically. The main growth area for housing is now in high-rise apartment towers built for rent: “The growth in new rental […]
As promised yesterday, the blog today looks at the wider impact of the major changes underway in housing markets. Driven by the ageing BabyBoomers these changes are, in effect, like throwing a series of large stones into the middle of a pool of water – the ripples spread wider and wider as the impact grows. One key […]
One good thing may come out of the current excitement over the US ethylene expansions being discussed on the basis of shale gas developments. Boards may decide to look at seriously at the way yesterday’s ‘demographic dividend’ has now become today’s ‘demographic deficit’. That would be a major step forward for the US and the […]
The blog’s latest post for the Financial Times FT Data blog is below. February 13, 2014 2:22 pm by FT Two remarkable global demographic developments have occurred since 1950. Yet only recently have their impact on companies and the economy begun to be properly understood. Life expectancy has risen by 50 per cent since 1950 […]
Do you recognise any of these women? Pictured in an excellent Financial Times article they are (left to right), New York Style icon Iris Apfel; model and actress Marisa Berenson; model and actress Lauren Hutton; fashion designer Jenny Kee; actress Meryl Streep. Nothing difficult about that you may say – even if, like the blog, you remember […]
France, with GDP of $2.6tn, is the 5th and final profile in the blog’s series on the impact of ageing populations on economic growth. Its importance lies not just in the size of its economy, but also in the fact that its relationship with Germany has been the driving force behind the European Union and the Eurozone. France […]
Knowing that we don’t know something makes us uncertain and cautious. If, for example, we come to a dangerous corner in the road when driving, we see the sign and slow down. Its when we are driving on a bright winter morning and don’t look for the ice under the trees that we end up in […]
October’s post ‘Women now have half the number of children compared to 1950‘ attracted great interest amongst blog readers from around the world. It highlighted how global life expectancy has risen 50% since 1950 to average 70 years. Over the same period, the average number of children being born has halved to just 2.5 per woman. It thus suggested today’s […]
Affordability is the key factor in today’s markets. And nowhere is this more true than in US housing. The subprime lending boom of the early 2000s is now long finished. And US GDP growth averages just 1.7% since 2000. So …
The blog first wrote about the potential impact on GDP growth of changing demographics in January 2010, in its first White Paper, ‘Budgeting for a New Normal’ This put forward the Scenario that the world economy could face an: “L-shaped recovery, where we follow the pattern of the Japanese economy after its ‘financial bubble’ burst in 1990. […]
Slowly but surely the world’s media are starting to follow the demographic story, and how it relates to today’s ongoing economic crisis. Thus the blog was interviewed by BBC Radio’s flagship current affairs programme, The World Tonight on Thursday (i…
Stock market investors in Japan are feeling very pleased. The Nikkei share index has risen 40% since new premier Abe was elected last year. And now the new governor of the Bank of Japan has confirmed he plans to wave a magic wand to restore economic …
The G7 countries (Canada, France, Germany, Italy, Japan, UK, USA) account for nearly 50% of global GDP. Today, however, their populations are ageing rapidly.
As consultants AT Kearney (ATK) note in a report on consumer spending patterns:
• The G…
It seems increasingly clear that China’s economic policy took a wrong turning 10 years ago, when it joined the World Trade Organisation.
2001 was also the year when the Western BabyBoomers (those born between 1946-70), began to leave the peak consumpt…