Two Huge Long-term Headwinds For US Economy


1. US Demographics & Productivity Look Bad For Growth

2. Women in the US Are Having Fewer & Fewer Children

3. The Trend in US Productivity is Also Discouraging

4. Conclusions & The Challenges Facing Investors

As long-time readers know, I tend to be upbeat about the economy and the stock and bond markets, and that has certainly proven to be the correct position to hold over the last 20-30 years. However, the US economy and the financial markets are facing some increasingly negative headwinds over the next few decades, which I will begin to introduce today.

Two serious negative headwinds going forward are: 1) A shrinking US workforce in the years ahead, due to our falling birthrate; and 2) An accelerating decline in US worker productivity. These are two of the most critical economic inputs which have the potential to limit growth in the economy for years to come.

I should point out the United States is not alone in facing these challenges. Japan and much of Europe have been dealing with them for years. So, it is not as if we are about to fall off a cliff. What it does mean, however, is that economic growth is going to be harder and harder to come by in the years ahead.

We all need to recognize the importance of these two troubling trends and plan for how we will deal with them. They are likely to affect everything from the economy to our jobs to the markets and therefore to our investments. As a result, I expect I will be writing about these developments periodically for months and years to come. Let’s get started.