While many hope the economy will soon reverse its downward course, one expert anticipates that our current situation will last into 2012.
Harry Dent, who spoke at an on-campus economic forum on Tuesday, cautioned that it might not be until 2017 before we see major improvements in the economy. Dent, author of “The Great Depression Ahead,” said the biggest reason for our failing economy is the lack of consumerism in older generations.
Dent said the older generations tend to hold onto their money and vehicles instead of going out and buying new ones — which may not bode well for those hoping a stimulus package will create financial stability.
The founder and president of the H.S. Dent Foundation, a non-profit organization, studies key economic trends and focuses on “helping people understand economic change,” according to the Foundation’s website. The “Dent Method” studies age demographics, including the buying habits of those over 40, to find the root cause of the state of the economy.
“People do predictable things based on age,” Dent said. “It’s nearly always the same.”
Information from the Bureau of Labor “can be used to forecast how spending will change in the years to come tells us when and how they spend money,” according to the website.
Dent said baby boomers — those born in the United States between 1946 and 1965 — outnumber echo boomers — children born in the U.S. between 1982 and 1994.
“Between about 18 to 47 we go through several stages of life,” the website reports. “From just entering the workforce at 18 to 22 years of age, to getting married between ages 22 to 30.”
According to the website, between the ages of 31 and 42 Americans have the most amount of debt because of first-time home purchases, car purchases and having children. Their spending is expected to increase until age 47.
“As we reach 50 and the kids leave home, we begin to spend less, paying down debts and saving more for retirement,” the website states. “After age 50 we tend to spend less for the rest of our lives, allowing growth in savings and investments. Income doesn’t decrease, but spending usually does.”
The most expenditures that take place after age 50 is for health care, such as pharmaceuticals, which grows until the average age of death, which is currently 78, according to the website.
“Young people cost everything and produce nothing,” Dent said.
But at the same time, Dent said that now is a great time to be getting an education.
“Right now, during the downturn is a good time to be in school,” Dent said. “Because until the economy improves, getting an education is a good thing.”
He said, however, that students graduating in May could benefit from the proposed “American Recovery and Reinvestment Act of 2009,” which has passed through the House and is currently being debated in the Senate.
Joanne Tucker contributed to this article.
Major economic events in recent U.S. history
* 1987 – Black Monday, stock market plunges over 20 percent in one day
* 1990 – First gulf war
* 1990-91- Recession
* 1997 -Asian currency meltdown
* 1998 – Long Term Capital Management hedge funds blew up, ensuing credit crunch
* 1999 – 2000 – Tech Bubble and bust
* 2001 – 9/11
* 2002 – War in Afghanistan
* 2003 – Iraq War
* 2005 – Hurricane Katrina
* 2005 – Oil Rose to $75 a barrel
* 2007 – Sub Prime Meltdown, oil over $90 a barrel
Source: H.S. Dent Foundation