What about the Unknown Unknowns?

We don’t know.

As the boomers drop out of the labour market, either because of fatigue, death or retirement, their demand will decrease and hence weaken economic activity – the author reckons this will go on for the next two decades.

More retirees mean slower household formation that leads to reduced consumer spending and a downward pressure on equity prices. This is accentuated by the change in the portfolios of older people from equities to ‘safer’ investments.

Losses from the decline in equity prices will force older people to delay retirement and increase the number of older people re-entering the workforce.

Not all industries will be affected in the same way (i.e. health-care spending will increase) 

A significant group of older people will literally run out of money and become totally dependent on the state for their day-to-day living.

Let me add a few more ‘knowns’ to the list:

The need to translate housing wealth into income will result in a disturbance to the housing market as more properties are sold – this will have a knock-on effect to the price of rental property and the demand for ‘downsized’ properties.

The continuing move of economic activity from West to East will reduce the level of demand in the US and Europe.

The alternative interpretation of the above point is that the markets of the East will provide huge business opportunities that will result in increased economic activity.

The massive debt over-hang that was formed during a period of higher economic activity will act as a long-term brake on economic recovery.

Population increase and the limitation of raw materials and food will continually drive-up the costs of basic living expenses meaning there will be less discretionary spending.