Retired Boomers Making Inflation Worse and Labor Shortage More
- The US’s Boomers are reaching retirement age.
- According to a BlackRock study, it comes at a time when more than a million Americans are out of work.
- Companies are increasing prices because of a labor shortage.
Millennials are already blamingBaby boomers to blame for the starter-home crisis. The economy’s impact on younger Americans might be something that younger Americans will have to pay attention to.
A new study has shown that at least 1.3 Million retirement-age adults have left the workforce since early 2020. study the investment-management firm BlackRock found. This figure is growing steadilyAccording to Pew Research Center, between 2008 and 2019, the number of retired people aged 55 or older grew by approximately 1 million per annum. Between 2019 and 2021, the number retirees 55 and over grew by 3.5 million.
It is contributing to America’s shortage of workers, which has forced companies pay more to recruit talent. This is also why companies justify paying more to attract talent. raising pricesInflation remains high even though it is improving slightly, Inflation rose 7.7%October’s year-over-2018 growth was 8.2%, down from September’s 8.2%. The Fed is trying to tone down price increases, retirement is proving to be an obstacle for them — it’s not boomers’ fault for retiring; it’s simply the reality of America’s changing demographics.
According to the BlackRock study, “An aging population will impact the US economy’s ability growth without creating inflation longer-term,” and that “it is difficult for the economy to function at current activity levels without fueling inflation.”
This means that the Fed must bring down inflation by reducing demand via the higher interest ratesThis signaled a more severe economic downturn than what the US could have experienced.
The labor shortage is here for good and it’s not a good sign of inflation
Several workforce factors are complicating things for the Fed.
The American population still has a high percentage of people who are working or looking for work. below pre-COVID levelsThe BlackRock report stated that the economy is facing a serious shortfall and that it won’t be able to recover soon. According to researchers, the pandemic had displaced 1.3 million people from the workforce by October. Companies are experiencing a wave of retirements, which means that labor costs are becoming more expensive. raising prices on goodsTo make up for it. Trump-era immigration policiesYou can also find out more about a declining birth rateAmerican workers are also being reduced.
According to the Gen Xers 55-64, they are one of few groups that still have their pre-pandemic employment rates. Labor Department data.
Plenty of older Americans are still working, though — in fact, more of themDue to medical advancements, many people can work into their 80s. However, the cost of retirement is too high for many.
Before the pandemic, the number octogenarians working in the workforce reached its peak: a Washington Post analysisData from the Bureau of Labor Statistics show that the number of adults working in their 80s has risen to a record high in 2019. There were approximately 734,000 octogenarians working in the US workforce in 2019, compared with 110,000 in 1980.
Politicians and labor activists argue that workers should be able to enjoy their rare bargaining power. wage gains without it leading to inflation-inducing price hikes — but companies would have to be willing to cut into their own profits.
Evidence suggests that they have not been willing or able to make this compromise. Corporate profits are at their highest ever since 1950,Many companies are clocking record profitsOver the past year, such like those in the oil-and-gas industry.
The retirement wave should be less painful if the cost of goods is reduced and profits are cut.
“Companies have passed on higher costs to customers. But they have also taken advantage of circumstances to expand profit margins,” Paul Donovan, the chief economist at UBS, said last month.
BlackRock forecasted that Fed rate increases would cause the US economy to enter recession. The prediction was made in 2023, according to other economists.
The BlackRock study found that this demographic shift workers of all ages propel “won’t reverse without massive structural modifications in workforce behavior over the time.” “Demographic trends also suggest that labor pool growth will be slower in the next 20 year than it was in the 20 prior years,” the BlackRock study said.
According to the BlackRock study people underestimate how much inflation will drop in the short-term. They also underestimate the impact of a future recession and slowdown in earnings. The study predicts that inflation will remain high during a recession and recommends investing in inflation-linked bonds for the short-term. It also warns against pursuing US stocks and treasuries. The BlackRock study however says that stocks are a good long-term investment.
“Long term we believe that stocks will outperform fixed income and are overweight equities,” the study stated.
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