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A 'Sobering Outlook' For The U.S. Economy

Feb. 03, 2019 5:31 PM ET3 Comments
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  • "It's a pretty sobering outlook" for the U.S. economy, says Hedgeye Demography analyst Neil Howe.
  • The demographic and productivity trends underlying the U.S. economy over the next decade or so are troubling.
  • The 2020’s look unremittingly bad. The average growth rate of the working age population will be around 0.2%.

"It's A Pretty Sobering Outlook."

That's the key investing takeaway from world-renowned Hedgeye Demography analyst Neil Howe on The Macro Show this week. He's referring to the disconcerting demographic trends churning beneath the surface of the U.S. economy.

We believe Neil's work in this area is so important, we wanted to highlight for you some additional, salient takeaways from his findings.

Below we've included the entire 32-minute video replay and transcribed (and provided) charts from his presentation.

Director of Research Daryl Jones: Neil, we're very excited to have you on here this morning. I know you have a few pretty interesting slides to walk us through. So let's jump right into it.

Demography analyst Neil Howe: Yes, thanks. Well, you know I like to talk about where we are in the broad sweep of history.

What I see right now is that the entire global economic recovery cycle is beginning to wind down. And, I'm a firm believer in everything that the Hedgeye Macro team says here on Quad 4 and Quad 3. But it basically means real growth is slowing down.

Why is real growth slowing down?

The fundamental reason is that we've run out of room for more employment. If you look at age and gender categories individually, and then adjust it by age, we are above the level of employment to population rate that we were at in 2007.

That's a secular trend. So I think we're running on fumes there.

Jones: Yeah, I was going to say you can really see the employment trends in this longer-term graph that you put together.

Howe: Well, yeah, take a look at that. By the way, we were just releasing a piece this morning taking on a recent report by Morgan Stanley, talking about the coming "youth boom" in the economy and how the demographic tailwinds

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