I’ve been listening to a lot of Wall Street “experts” saying that we’re stuck in a 2% growth rate due to demographics. The premise is the aging Baby Boomer generation is not consuming as much as they get older thus hurting growth of the economy because it is approximately 70% consumption. Sounds reasonable, doesn’t it?

Although I do believe in demographics influencing economies, my job is to see how they may affect stock market returns. I came across an article showing that Millennials (aged 18-34) have just surpassed the Baby Boomer generation in population. That’s a very interesting fact.

I believe this generation could pick up the slack that indeed will be produced by the aging Baby Boomers. And not only that, we’re all living longer and being more productive in our older years.

Combining this information with pro-growth policies, I think you may have a recipe for long term stock market growth—by at least getting back to the historical average of about 3% GDP (gross domestic product).

Sustainable growth like that should grow corporate earnings quite nicely, which if history repeats itself, stock market returns will follow. That is my hypothesis.

*Disclosure: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results.

Source: Pew Research Center

Best Regards,

Terrence Majerko