….not to be taken too seriously. Especially this one – it is on the economy. And what the hell do I know about the Dismal Science?
One of the largest factors influencing the economy is an oft-used economic term, ‘confidence’. Do we have some or do we not? Confidence, basically, is the mood of the peeps. If the people are fearful or unsure, they stop buying. If they are upbeat and so are the hemlines, they continue to buy. As Sal says, “Attitude is everything!” And that is especially true for the marketplace.
And what affects attitude the most? The news, of course. If you and your friends are doing well, a lot of bad news will change your spending practices and, if you are all doing poorly but the news is upbeat, you have hope and energy for better days ahead (and buy F-150’s and property you can’t really afford). It is the way of things.
Of course, there are other factors involved. Supply chain issues, wars, harvests, climate change, who the current president is . . . those are all influences that, together, form attitudes, affect mood and boost or erode confidence. And, so with just a little general observation, one can usually determine where the economy is basically going and plan accordingly.
Today? It is not so easy. On the one hand, we are just now recovering from the latest assault on our collective mood from Covid to Trump, from mass shootings to climate change, from the threats of war to inflation. I say ‘recovering’ because Covid seems to be retreating, ugly Republicans are faltering, inflation is dropping and there seems to be a general sigh of relief from the last few years of rising tensions.
But….well, maybe not…..the world is still maintaining a severe state of madness, inflation is still omni-present, wars are still underway and the climate is still changing. The casual observer may be forgiven for mistaking a half-time respite for the end of the game when, in fact, there is still another shoe to drop (forgive the mixed metaphors, please). We may even just be on the verge of round 2 in a 10 round battle. Who knows?
A lot of pundits are still preaching disaster. And none are trumpeting victory. So, on that score, we are still doomed. But there is one weird factor that might just settle the question for awhile at least. And, by awhile, I mean the rest of my remaining days. That factor is demographics. Aging demographics to be more precise.
All of the BIG economies are facing an aging population that no longer produces GDP like they used to. Not only do they not produce GDP like they used to they did not produce enough children to even replace themselves on the GDP treadmill. Japan is one of the leaders in aging with the bulk of their population requiring support from generations that are younger but notable for their greatly reduced numbers. T’aint enough working age Japanese producing to support the old folks.
China, due to the long-maintained one-child policy, is also losing production capacity. For the first time in years, China has unemployed. And those still employed are too few to carry the rest.
And on and on we go. Canada, too. Very much so. Basically the First world is stalled in the productive (growth) reproducing (following generation) age (everyone is old) category and that is having an impact already with considerably more to come.
So how does ‘labour shortage’ show up? Firstly, it has to show up as higher wages for those who are still younger. Secondly, it might trigger an immigration influx, a baby boom or even a robot-artificial intelligence boom. Thirdly, the amount of middle class wealth will dissipate and lifestyles will be curtailed. Those still playing will be poorer overall. Fourthly, real estate will stall out. There is much more, of course, but those four are pretty safe bets.
What does it mean to guy like me? Not a helluva lot. My indulgences will curtail some but just as much because of my age as my wallet. I’ll travel less. Eat less. Drink less. Sleep more. I will not be a producer of any sort save for the odd blog. I am not done but I am definitely parked. And there are billions like me, it seems. That means stagflation if not recession. The economy will stall.
When economies stall, fewer babies are born, more wars are started and, if climate change exacerbates that, we will be in economic stasis at best and maybe a state of economic retreat. We may even go into a dark age of sorts…..
I, personally, have a better attitude than the facts might warrant. I see a dark age as a recovery age, a recuperative time, a chance to re-direct our species in a more sustainable way. I think the smaller population will help that, not hinder it. I think values will shift and the climate may even alter favourably…could happen….
It just may mean that, after awhile, we will be forced to do better than we have been doing. I hope so.
About 10 years ago I raised the “aging demographics” flag to my financial advisor.
I asked him if we might be heading to a Japanese style stagflation.
He gave a flippant answer and tried selling me more “high fee-low growth” Mutual funds….I eventually dumped him.
Shoulda done it years before that.
I agree there seems to be a lack of confidence in the population.
Our govt “overlords” tell us “inflation is over”…while food, gas, accommodation (rent) costs are skyrocketing and everyone is complaining about it…
I dont see or hear a lot of optimism these days.
Talk about “loss of leadership”. Trudeau? Poilievre?
No one believes anything the govt or media spews out anymore.
Bank failures in the States…don’t help.
Canada’s (Liberal) answer….throwing the immigration door wide open.
I got a taxi home last Saturday night and the East Indian taxi driver was ranting and raving about ….’Student Visas”…..seems the way around Canadian immigration laws these days is …Student visas.
Our country is being overwhelmed by cynical leaders, loss of control of our borders, deficit budgets, inflation, corruption and apathy.
Get out now!
Good advice. Getting out works! So far, it is the only answer I can find.
I see things slightly pessimistic at this moment. Inflation is down, compared to last year, but still at 7%. We can expect 2 more increases in rent, so the loans will be getting more expensive. So this will definitely have a negative impact on consumption.
All of us can only spend each Euro or dollar once, so hard choices will have to be made more often, and we will go first for the basic needs like housing,food and clothing. The luxury expenses will come later (or not)
So the impact on the economy will be quite big I think, which will bring us into stagflation (and hopefully not depression), but we are on the edge…
Throw in war, bad politics and politicians, Biden who wants to run for a second term or Trump running for re-election, climate change and we are in for some difficult years to come
Middle class is disappearing very fast, soon there will only be the super wealthy and the poor, so again bad for consumption
Let’s hope that we go back to our roots, growing, buying and producing locally and get back to basics
Just heard the story yesterday about the AI guru that resigned from Google to warn us about the dangers of AI. Really scary if you ask me, soon we will be overwhelmed with false information, false pictures, false movies…and no one will know any more what is the truth. And then AI computers will start to take over…makes me think of the Terminator movies….if that happens, even living on Read Island will not help us
But if you live on Read Island….the fish will be fresh.
Like your neighbors!
You are a prescient prophet, NonCon. Today a friend, neighbour and regular on this blog just dropped off a couple of big Lings. We have six fresh meals in our near future! Given that I couldn’t catch a fish if it and I were in a bathtub, that is a wonderful gift!
I am surprised you don’t master the art of fishing after 20 years on the island. Although I imagine there must be lots of fish in the waters around read Island?
No real excuses but, for the record, here they are: The area in which I live includes all of the area you see in the blog headpage picture times two. It is Rockfish Conservation area. Meaning: not allowed to fish there. If you are caught fishing there, they take your boat. #2 – I am not keen on the activity. Too frustrating and expensive. If I actually caught a few of them, I might muster more enthusiasm but I rarely do. Over the years as I have lost tons of fishing equipment (lures), wasted hours and burned gallons of gas. I am in the red. I’d need to catch a salmon a day for five years just to break even. Logic suggests the cheapest way to eat fish is to start at the grocery store and go from there. #3 – I always have something better to do. I am busy. Things need doing. Fish just get bigger if you leave em alone. I keep thinking I am just fattening them up for later. I know that reason #3 is a real stretch but there is a small element of truth there.
Point taken, I started fishing again last year when we were on holliday in France. I promised my wife I would catch some nice fish, so we could enjoy dinner in the evening. went fishing almost each day for like 2 hours a day (for 3 weeks). Caught 0 fish, lost lots of lures and lines, but I enjoyed it every minute . Advantage is, that I was on holliday with no chores waiting for me
Two guys go out fishin’ together…..end of the day they bring home a bottle scotch. They love fishin’…
I am a little (just a little) more positive about the human race. We can fix just about everything once we put our minds and efforts into the problem. The problem is we wait till the last moment. Four guys where going fishing, one brought a case of beer another a bottle of scotch the third some wine and the fourth a loaf of bread. The others asked what is all the bread for?
good idea…fishing expedition, followed by a BBQ and scotch