Analysis: Baby boomer fears cast another pall over markets
On Wednesday September 7, 2011, 9:22 am
By Michael Dolan
LONDON (Reuters) – Even as anxiety over policy inertia, banking and sovereign debt crises dominate the headlines, a long-festering concern over the impact of aging Western populations on stock markets is returning to add even greater gloom.
Hopes are dimming for a resolution of the worst ravages of the 2007-2009 credit shock before the mass retirement later this decade of the “baby boom” generation – the outsized population cohort born shortly after World War Two.
For many convinced of the long-term power of demographic trends on financial markets, the fuel for ever-rising stock markets is already evaporating fast and a 10-year equity bear market at least is in the offing.
These long-held concerns are now critical in a decade where the 79 million U.S. people born between 1946 and 1964 start retiring as soon as this year and larger boomer retirement waves build to peak around 2020-2022.
The concern is that the ebb and flow of U.S. stock markets over the past 50 years is highly correlated with the available pool of household savings channeled into equity investment.