MEET THE 'ECHO BOOM': The 80 Million People Who Will Save The American Economy
This generation is also known as "Generation Y" or "Millennials" (because they came of age in the new millennium).
They're generally defined as having been born between 1980 and 1995, making the oldest Echo Boomers just 33. If you conceived to Duran Duran, you gave birth to a Millennial.
And eventually they will be the largest cohort in the country.
They are less white and more diverse.
Their values are mostly similar, although they may be less materialistic than other generations.
They will be better educated.
And they are more optimistic. And for good reason...
At some point, housing formation will return to the mean.
It's already getting there.
JMPG estimates nearly 3 million in pent-up demand. And look at the growth rate in couples! (Data not available for same-sex couples).
They've already caused a boom in rentals. This will eventually spill into homebuying.
And again, the oldest millennials are in their early 30s — nowhere near peak earnings years.
And their overall assets are at least two decades away from topping out.
And nine out of 10 millennials say they eventually want a place they own, according to a recent Fannie Mae survey.
Source: Atlantic
Now, it's true about half of Echo Boomers' wealth is in bonds, money market accounts or cash...
Source: Kiplinger
And only 22% of investors under age 35 -- many fewer than in 2001 -- say they’re willing to take on substantial risk.
Source: Kiplinger
But analysts like Tobias Levkovich believe that will change as the cohort enters prime earnings age — we know that the more 30 somethings, the higher the S&P goes.
Source: Byron Levkovich/Citi
And equity values turn out to be closely related to the age distribution of the population, so you can plot the path that the P/E ratio is likely to follow in the next few decades based on demographics.
Source: Calculated Risk
Most brands doing well now will continue to do well in the future.
And they will never stop buying tech.
Their greater tolerance for caring for their elders will help lower medical costs.
Finally and most importantly, they are waiting longer to get married. Presumably that means more economically efficient marriages and fewer inefficient (ie divorce-fated) ones.
In sum: this better-educated, more financially savvy generation will yield a higher stock market, higher earnings, stronger economy.
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