The Weekly Update 1/24/2025
Just Like 1985 Only Bigger!
Back in the early 1980’s the generation of people we refer to as the 78 million “Baby Boomers” started to hit the peak of their spending years, roughly age 50-55. The Economy expanded rather quickly from the demand for, well, everything from this largest generation ever in America.
In the first chart below, my friend Mike Williams over at Truvestments reminded me that we just welcomed the next generation, behind the now larger cohort than the baby boomers (The Millennial generation at 88 million), Gen Z at 80 million people strong.
The end of 2024 marked the 20 year span of births which will place nearly half of the U.S. population right in the Personal Consumption Expenditures (PCE) sweet spot. Our Country has never had two generations back to back at over 80 million each.
Recall that PCE is 67.8% of our entire economy, (source: JP Morgan Guide to the Markets 12-31-2024). It would be reasonable to assume that the demand from these two cohorts will be about 2x what we experienced in the 1980’s from the Baby Boomers.
Yet, just about a week ago the average investor, Mr. & Mrs. 401(K); were measured solidly in the Extreme Fear Category as measured by The Fear & Greed Index below.
It is a fair observation to conclude that our U.S. economic expansion is solid and expanding. Historically, an expanding and growing economy will drag the values of Corporate America up with it.
Like last weeks weekly update (Read it Here), let your eyes gaze from right to left on the purple arrow at the bottom of the chart below and make an important "note to self" that investors are as fearful now as they were at the October 2024 lows.
I believe our bigger financial futures are solidly supported by the demand that will be forced on our economy for the next 20 years.
I did not say market valuations go straight up, and I did not say without volatility, yet the data flow suggests the good old USA has a very bright outlook. Think “Five Year Money” (Read it Here).
I am interested in your thoughts, comments, and observations. Feel welcome to call, email, or stop by the office and say Hi.
Respectfully,
James O. Lunney, CFP®
CERTIFIED FINANCIAL PLANNER™ Professional
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The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
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