Some More Good News – January 2021 Edition

Beth Misak |

By Paul Hynes, CFP®
January 2021

There’s more than enough disturbing news these days. Yet, if we look carefully, we can also find some good news as we begin 2021.

There’s a ray of hope that vaccines are rolling out around the globe. That means that family members and friends might be able to get together again, enjoy one another’s company, and share the bonds that make us human. Elder citizens who have been in isolation could resume socializing with other human beings. That would be wonderful news for everyone.

The economy is continuing to open up, albeit slowly. While still at depressed levels compared to a year ago, economic activity is showing signs of improvement. More people are going back to work, passing though TSA checkpoints, dining in restaurants, and yes, even going to the movie theater.1 That’s good news for businesses.

Big picture, there’s a demographic trend in full swing that most people aren’t talking about. And, this is really good news for the long-term health of our economy. It’s about the Millennials. These are the people born between 1981 and 1996, now ages 24 – 39.2

According to the Pew Research Center, in 2019, Millennials surpassed Baby Boomers as the nation’s largest living adult population.3 Much like the Baby Boomer generation, the Millennials are expected to have a major influence on our world. It’s certain to be different than prior generations. Yet, some things remain the same. Millennials are setting up households, getting married, having babies, and spending the money needed to do all these things.

Household formation is a major driver of economic activity. Buying a home can be the single largest lifetime purchase. Whether buying or renting, the home needs to be furnished and supplied. If a baby enters the picture, there’s even more spending to follow.

Consumer spending is the largest driver of economic activity, accounting for about 70% of the total economy in the U.S.4 So, a large population of people spending money can be very good news for the economy, and for investors.

We hope you can find other good news in your life. If you’d like to learn more about how demographic trends might affect your investments, talk with us. We’re here to help.

 


Sources:

1 First Trust Corona High Frequency Data 01/12/2021 https://www.ftportfolios.com/retail/blogs/economics/index.aspx

2 Defining Generations: Where Millennials end and Generation Z begins. Pew Research Center. Jan 17, 2019. https://www.pewresearch.org/fact-tank/2019/01/17/where-millennials-end-and-generation-z-begins/

3 Millennials overtake Baby Boomers as America’s largest generation, Pew Research Center, Apr 28, 2020 https://www.pewresearch.org/fact-tank/2020/04/28/millennials-overtake-baby-boomers-as-americas-largest-generation/

4The US Dept of Commerce, Bureau of Economic Analysis Interactive Data Table, National Data, National Income and Product Accounts Table 1.1.6 Real Domestic Product, Chained Dollars as of Q3 2020 https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=2#reqid=19&step=2&isuri=1&1921=survey