the baby boom chart book 1996 - · pdf filedeutsche morgan grenfell c.j. lawrence established...

Deutsche Morgan GrenfellC.J. LawrenceEstablished 1864

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Portfolio Strategy Service

Topical Study #29

THE BABY BOOMCHART BOOK 1996

March 28, 1996

❖

Dr. Edward YardeniAmalia Quintana

1910

1915

1920

1925

1930

1935

1940

1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

2.0

2.5

3.0

3.5

4.0

4.5

2.0

2.5

3.0

3.5

4.0

4.5

94

#1 In

200

0, t

he

Bab

y B

oo

mer

s w

ill b

e 36

-54

year

s o

ld.

LIV

E B

IRT

HS

*(m

illio

ns)

* F

igur

es in

par

enth

eses

are

the

youn

gest

and

old

est a

ges

of g

roup

mem

bers

dur

ing

1996

.

"Gra

ndpa

rent

s"44

mill

ion

(72-

86)

"Par

ents

"55

mill

ion

(51-

71)

Bab

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76 m

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Bab

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ust

41 m

illio

n(2

0-31

)

Bab

yB

oom

let

64 m

illio

n(0

-19)

/ March 28, 1996 / DMG/CJL Topical Study #29

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9835

40

45

50

55

60

65

35

40

45

50

55

60

65

Q4

Q4

AGE COMPOSITION OF LABOR FORCE*(percent) 1962

1975

1980

1987

16-34 Year Olds

35-64 Year Olds

* Oldest and youngest Baby Boomers turned 16 in 1962 and 1980, respectively.

#2

Currently, the labor force is the most mature since 1970. Over the rest of the decade it will be as mature as during the late 1960s.

19551957

19591961

19631965

19671969

19711973

19751977

19791981

19831985

19871989

19911993

19951997

19992001

20032005

20072009

2011

32

34

36

38

40

42

44

46

48

50

52

32

34

36

38

40

42

44

46

48

50

52

Jan

THE AGE WAVE

Age Composition ofAdult Population:15-34 Year Olds*(percent)

Age Composition ofLabor Force:16-34 Year Olds(percent)

* Projected data start in 1994. Adult population is 15 years and older, and includes armed forces overseas.

#3

- The Age Wave -

DMG/CJL Topical Study #29 / March 28, 1996 /

60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98.4

.5

.6

.7

.8

.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

44

46

48

50

52

54

56

58

60

Jan

Jan

Age Wave*

Ratio of S&P 500 Stock Indexto Personal Consumption Expenditures**

* Percent of labor force 35-64 years old.

#4

Stock prices have risen faster than consumption and home prices as the Baby Boomers have aged.

68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 981

2

3

4

5

44

46

48

50

52

54

56

58

60

Jan

Feb

THE AGE WAVE

Age Wave*

Ratio of S&P 500 Stock Indexto Existing Home Prices

* Percent of labor force 35-64 years old.

#5

- The Age Wave -


56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 980

2

4

6

8

10

12

35

40

45

50

55

Jan

Feb

THE AGE WAVE & INFLATION

Inflation Trend**

Age Wave*

** Five-year moving average of yearly percent change in CPI. * Percent of labor force 16-34 years old.

#6

Age Wave is probably a big influence on inflation trend and suggests inflation will remain subdued at least through end of the century. The Baby Boomers will be 36-54 years old by the year 2000.

56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 982

3

4

5

6

7

8

9

10

11

12

13

36

38

40

42

44

46

48

50

52

Jan

Feb

THE AGE WAVE & BOND YIELD

Ten-Year GovernmentBond Yield**

Age Wave*

** Five-year moving average of ten-year government bond yield. * Percent of labor force 16-34 years old.

#7

- The Age Wave -


10

15

20

25

30

35

40

45

50

10

15

20

25

30

35

40

45

50

25-34

10

15

20

25

30

35

40

45

50

10

15

20

25

30

35

40

45

50

35-44

10

15

20

25

30

35

40

45

50

10

15

20

25

30

35

40

45

50

45-54

10

15

20

25

30

35

40

45

50

10

15

20

25

30

35

40

45

50

55-64

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

10

15

20

25

30

35

40

45

50

10

15

20

25

30

35

40

45

50

65 & Over

#8 US POPULATION BY AGE (millions)

Source: Bureau of the Census, U.S. Department of Commerce

- Population: Numbers -


-1

0

1

2

-1

0

1

2

25-34

-1

0

1

2

-1

0

1

2

35-44

-1

0

1

2

-1

0

1

245-54

#9 US POPULATION BY AGE (annual change, millions)

-1

0

1

2

-1

0

1

255-64

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010-1

0

1

2

-1

0

1

2

65 & Over




-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

25-34

-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

35-44

-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

45-54

-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

55-64

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

-4

-2

0

2

4

6

8

-4

-2

0

2

4

6

8

65 & Over

#10 US POPULATION BY AGE (yearly percent change)




62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

2.4

2.6

2.8

3.0

Jan

POPULATION(yearly percent change in 12-month average)

Civilian NoninstitutionalWorking-Age Population**

TotalPopulation*

* Population used to calculate per capita income. Includes military in US. Source: Census Bureau.** Source: US Department of Labor, Bureau of Economic Analysis.

#11

The working-age population grew much faster than the total population during the late 1960s and 1970s as the Baby Boomers flooded into the labor markets. In the 1990s, the growth of the working-age population is at record lows.

60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96.0

.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

.0

.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

94

HOUSEHOLD FORMATION(millions)

5-year moving average

Source: US Department of Commerce, Bureau of the Census, Series P-20.

#12

The Baby Boomers are no longer young adults. As a result, household formation has declined sharply from 1.6 million per year, on average during the 1980s to 0.9 million per year from 1990 to 1994. This trend has depressed housing starts.



48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 962.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

2.6

2.7

2.8

2.9

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

94

94

AVERAGE POPULATION

Per Family

Per Household

Source: Current Population Reports

#13Since the mid-1960s there has been a significant downtrend in the average number of people in both family and household living units. Households are smaller than families, on average, because there are many single-person households: People are marrying later, getting divorced, and living longer.

67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 960

2

4

6

8

10

12

0

2

4

6

8

10

12

93

NONFAMILY HOUSEHOLDS BY AGE OF HEAD(as a percent of total households)

65 +

25-34

35-44

45-54

55-64

15-24

Source: US Department of Commerce, Bureau of the Census, Series P-20.

#14

In 1993, nearly 30% of all households were not families, up from about 18% in 1967. One-third of the nonfamily households are senior citizens.

- Population: Characteristics -


40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9820

21

22

23

24

25

26

27

20

21

22

23

24

25

26

2794

94

MEDIAN AGE AT FIRST MARRIAGE

Men

Women

Source: Current Population Reports

#15

People are getting married for the first time at a later age. The medium age for men is up to nearly 27 from about 23 twenty years ago. Women are waiting until their mid-twenties to marry. During the 1950s and 1960s, they tended to marry in their early twenties.

40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 980

5

10

15

20

0

5

10

15

20

94

94

MARRIAGE & DIVORCE(rate per 1000 population)

Marriages

Divorces

Source: US National Center for Health Statistics, Vital Statistics of the United States.

#16

The marriage rate has been moving gradually lower in recent years, while the divorce rate has been relatively steady.



27

28

29

30

31

32

33

34

27

28

29

30

31

32

33

3493

52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 9667

69

71

73

75

77

67

69

71

73

75

77

94LIFE EXPECTANCY AT BIRTH*(years)

POPULATION: MEDIAN AGE IN YEARS

* Source: US National Center for Health Statistics, Vital Statistics of the United States.

#17

The median age of the US population has risen sharply over the past 20 years because the Baby Boomers are aging and senior citizens are living longer. Life expectancy is up over 75 years compared to about 70 years during the late 1960s.

15-19 20-24 25-29 30-34 45-64 65-74 75-84 85 & Over 0

5

10

15

20

25

30

35

40

45

0

5

10

15

20

25

30

35

40

45MOBILITY STATUS BY AGE GROUP, 1993-94(percent movers)

18

36

31

18

9

6 5 6

Source: Bureau of the Census, Geographical Mobility: March 1992 to March 1993,Current Population Reports, Series P-20.

#18

Older people tend to move less than younger ones. The medium age of the population is around 34, up from 28 twenty years ago, and it will continue to rise over the rest of the decade.



60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9850

55

60

65

70

75

80

85

90

95

100

105

110

7000

8000

9000

10000

11000

12000

13000

14000

15000

16000

17000

18000

19000

20000

21000

22000

23000

Jan

Jan

Q4

REAL PERSONAL INCOME & CONSUMPTION PER CAPITAVS PRODUCTIVITY

Real Personal IncomePer Capita(1992 dollars, 12-month sum)

Real Consumption Per Capita(1992 dollars, 12-month sum)

Nonfarm Productivity(1977=100)

#19

Per capita real personal income and consumption are at record highs. Productivity is the main determinant of these two measures of the standard of living and it is also at a record.

67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 988

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

Jan

93

INCOME PER CAPITA(thousands)

Adjusted Mean HouseholdIncome Per Capita*(1993 dollars)

Personal Income Per Capita(1992 dollars, 12-month sum)

* Mean income of households divided by average population per household.

#20Both median and mean family household income data show virtually no growth over the past 25 years. Both measures need to be divided by the average size of the household unit, which has been falling. Adjusted this way, mean household income per capita has been growing in line with personal income per capita!

- Income & Spending -


62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98-2

0

2

4

6

8

10

-2

0

2

4

6

8

10

Jan

REAL PERSONAL INCOME(yearly percent change in 12-month average)

5.3%

3.6%

2.8%

1.8%

* Dashed lines show decades’ annual averages.

#21

Real personal income growth has been on a downtrend over the past three decades as growth in productivity stagnated. This long-term trend should be reversed in the next decade.

62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98-2.5-2.0-1.5-1.0-.5.0.51.01.52.02.53.03.54.04.55.05.56.06.57.07.58.08.5

-2.5-2.0-1.5-1.0-.5.0.5

1.01.52.02.53.03.54.04.55.05.56.06.57.07.58.08.5

Jan

REAL PER CAPITA PERSONAL INCOME(yearly percent change in 12-month average)

4.0%

2.5% 1.8%0.7%


#22



62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98-2

0

2

4

6

8

-2

0

2

4

6

8

Jan

REAL CONSUMPTION EXPENDITURES(yearly percent change in 12-month average)

4.9%

3.6% 3.0%

2.0%


#23

Consumer spending growth has been on a downtrend for quite some time because income growth has been on a downtrend. Income growth is likely to improve. The risk is that consumption growth won’t do the same if the Baby Boomers decide to save more.

62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98-2

0

2

4

6

8

-2

0

2

4

6

8

Jan

REAL CONSUMPTION PER CAPITA(yearly percent change in 12-month average)

3.6%

2.5%2.2%

0.9%


#24



60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98500

1000

1500

2000

2500

500

1000

1500

2000

2500 SepREAL CONSUMPTION PER CAPITA(1987 dollars, saar)

Rent &Utilities*

Food

MedicalCare

* Rent includes owner- and tenant-occupied rent. Utilities include electricity, gas, water and other sanitary services, fuel oil and coal.

#25

On a per capita basis, the fastest growing categories of real consumption are medical care and recreation and entertainment. The other major categories are showing relatively little growth per capita.

60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98200

400

600

800

1000

1200

1400

1600

1800

2000

200

400

600

800

1000

1200

1400

1600

1800

2000

Sep

REAL CONSUMPTION PER CAPITA(1987 dollars, saar) Transportation

Personal Business*

Clothing & Shoes

Recreation

* Includes brokerage charges and investment counseling, bank service charges, services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans, expense of handling life insurance legal services, funeral and burial expenses and other.

#26



60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 989

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Sep

REAL CONSUMPTION BY CATEGORY(as a percent of total real consumption)

Rent &Utilities*

Food

MedicalCare

* Rent includes owner- and tenant-occupied rent. Utilities include electricity, gas, water and other sanitary services, fuel oil and coal.

#27

For the first time ever, consumers are spending as much of their budgets on medical care as on food. The proportion of total consumption spent on food has been declining for a long time, as consumers spend relatively more on medical care and recreation.

60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 984

6

8

10

12

14

16

4

6

8

10

12

14

16

Sep

REAL CONSUMPTION BY CATEGORY(as a percent of total real consumption) Transportation

Personal Business*

Clothing & Shoes

Recreation

* Includes brokerage charges and investment counseling, bank service charges, services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans, expense of handling life insurance legal services, funeral and burial expenses and other.

#28



67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 9515000

20000

25000

30000

35000

40000

45000

50000

55000

60000

15000

20000

25000

30000

35000

40000

45000

50000

55000

60000

93

MEAN INCOME OF HOUSEHOLDS BY AGE OF HEAD(1993 dollars)

45-54

35-44

55-64

All

25-34

65 +

Source: Bureau of the Census, Income Statistics Branch, unpublished data.

#29

Older workers tend to earn more than younger ones, presumably because they are more experienced, productive, and committed to their jobs. By the year 2000, the Baby Boomers will be 36-54 years old. So there will be more households earning more money than ever before.

67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 9510

12

14

16

18

20

22

24

10

12

14

16

18

20

22

24

93

NUMBER OF HOUSEHOLDS BY AGE OF HEAD(millions)

25-34

35-44

45-54

55-64

65 +

Source: Bureau of the Census, Income Statistics Branch, unpublished data.

#30

During the 1980s, all household age groups shown here increased in numbers except the 55-64 group. During the 1990s, only the 35-44 and 45-54 year olds will grow.



67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95200

300

400

500

600

700

800

900

1000

1100

1200

200

300

400

500

600

700

800

900

1000

1100

1200

93

AGGREGATE MONEY INCOMEBY AGE OF HOUSEHOLD*(billions of 1993 dollars)

* Mean income times number of households.

25-34

35-44

55-64

45-54

65 +

#31

During the 1990s, the only age groups likely to show gains in total group money income are people 35-44 and 45-54.

67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 9510

15

20

25

30

10

15

20

25

30

93

93

AGGREGATE MONEY INCOMEBY AGE OF HOUSEHOLD*(as a percent of total money income)

* Mean income in 1993 dollars times number of households.

35-44

45-54

25-34

55-64

65 +

#32

By the year 2000, 35-54 year olds will probably account for 65% of personal income, up from about 50% currently.



6061626364656667686970717273747576777879808182838485868788899091929394959697983.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

3.5

4.0

4.5

5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

10.0

Jan

PERSONAL SAVINGS RATE(12-month average, percent)

#33

As the Baby Boomers age over the rest of the decade, they will have more income than ever before. They will probably choose to save more of it. The savings rate should move over 7% by the year 2000.

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998-50

0

50

100

150

200

250

300

-50

0

50

100

150

200

250

300

Jan

Jan

PERSONAL SAVINGS VSCONSUMER INSTALLMENT BORROWING(12-month sum, billion dollars)

PersonalSavings

PersonalBorrowing

#34

If the savings rate and incomes rise, so will total personal savings. By 2000, savings could climb to $300 billion.

- Personal Savings -


60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98-100

-50

0

50

100

150

200

250

300

-100

-50

0

50

100

150

200

250

300

95

93

93

PERSONAL SAVINGS AND ITS COMPONENTS(billion dollars)

Personal Savings

Impersonal Components

Truly Personal Components

#35

Personal savings includes two big "impersonal" sources of income which are not taxed and can only be saved. They exceed $250 billion and currently exceed total personal savings. Indeed, excluding these two, "truly" personal savings has been mostly negative since 1987.

60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 960

50

100

150

200

250

0

50

100

150

200

250

93

"IMPERSONAL" COMPONENTS OF PERSONAL INCOME(billion dollars)

Imputed Interest Received FromPrivate Noninsured Pension PlansAnd From Life Insurance Carriers

Employer Contributions ToPrivate Pension Funds

#36

- Personal Savings -


50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9825

30

35

40

45

50

55

60

65

70

75

80

25

30

35

40

45

50

55

60

65

70

75

80

Feb

CIVILIAN LABOR FORCE(as a percent of total labor force)

Female

Male

#37

Males now account for less than 55% of the labor force, down from 70% in the early 1950s.

50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9815

20

25

30

35

40

45

50

55

60

65

70

15

20

25

30

35

40

45

50

55

60

65

70

FebCIVILIAN LABOR FORCE PARTICIPATION RATE*(percent)

Female Component*

Total

Male Component*

* Labor force divided by noninstitutional working-age population. Male and female components are persons that are 16 years and older.

#38

The labor force participation rate is hovering around 66%. Since the 1950s, the decline in the male component of the labor force participation rate has been more than offset by females.

- Labor Force -


50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9830

35

40

45

50

55

60

65

70

75

30

35

40

45

50

55

60

65

70

75

Jan

Jan

FEMALE CIVILIAN LABOR FORCE PARTICIPATION RATE BY AGE*(percent)

35 & Over

16-34

* Female labor force divided by female noninstitutional working-age population.

#39

A record 53% of all woman who are 35 years or older are in the labor force. The labor force participation rate of younger women has stabilized around 70% in recent years.

50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9865

70

75

80

85

90

95

65

70

75

80

85

90

95

Jan

Jan

MALE CIVILIAN LABOR FORCE PARTICIPATION RATE BY AGE*(percent)

35 & Over

16-34

* Male labor force divided by male noninstitutional working-age population.

#40

The percent of older males participating in the labor force is flat around 70%, while the younger ones’ participation is around 83%.

- Labor Force -


48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 982

4

6

8

10

12

2

4

6

8

10

12

Q4

CIVILIAN UNEMPLOYMENT RATE(percent)

#41

The unemployment rate shifted upward during the 1970s and early 1980s relative to inflation because there was a huge influx of young workers who tend to have higher unemployment rates than older ones. Since the early 1980s, the unemployment rate has been shifting back down.

1

2

3

4

5

6

1

2

3

4

5

6

Q4

48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 980

1

2

3

4

5

0

1

2

3

4

5

Q4

Q4

TOTAL UNEMPLOYED BY AGE(as a percent of total labor force)

55 & Over

25-54

16-24

#42

- Unemployment -


50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 9835

45

55

65

75

35

45

55

65

75

Jan

LABOR FORCE: MEN 55 YEARS & OVER(as a percent of male civilian noninstitutional population 55 years & older)

#43

There has been a dramatic long-term downward trend in the labor force participation rate of older men. The corporate restructurings of the past decade have not accelerated this trend.

48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 982

4

6

8

10

12

2

4

6

8

10

12

Feb

UNEMPLOYMENT RATES BY SEX( percent)

Males

Females

#44

During the 1950s, 1960s, and 1970s, the female unemployment rate usually exceeded the male rate. Since the 1980s, the two rates have been nearly identical.

- Unemployment -


68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 970

100

200

300

400

500

600

700

800

900

0

100

200

300

400

500

600

700

800

900Sep

94

94

MEDICAL CARE SPENDING(billion dollars)

Total Medical CareConsumption

Medicare Plus Medicaid

Medicare

#45

Spending on health care will continue to rise rapidly as Baby Boomers age.

67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 980

1000

2000

3000

4000

5000

6000

7000

0

1000

2000

3000

4000

5000

6000

7000MEDICARE/TOTAL POPULATION 65 YEARS & OLDER*(dollars)

* Projections begin in 1994.

#46

- Health Care -


64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08-20

0

20

40

60

80

100

120

140

-20

0

20

40

60

80

100

120

140

2005

SOCIAL SECURITY SURPLUS(billion dollars)

Dashed line is Congressional Bugdet Office’s baseline projection.

#47

Social Security will remain in surplus for the next 15 years. Big deficits will start when the Baby Boomers start to retire after 2010.

64 66 68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 080

200

400

600

800

0

200

400

600

800

F

2005

2005

FEDERAL OUTLAYS(billion dollars)

Social Security

Medicare+Medicaid

F = Forecast line. Source: Congressional Budget Office.

#48

Social security and health care outlays will rise sharply as the Baby Boomers age.

- Social Security -


TOPICAL STUDIES

#11 Dr. Edward Yardeni and Deborah Johnson, The Restructuring Of Corporate America Is Bullish, December 9, 1987

#12 Dr. Edward Yardeni, How The Baby Boomers Are Changing The Economy,April 6, 1988

#13 Dr. Edward Yardeni, The Coming Shortage Of Bonds, June 20, 1988

#14 Dr. Edward Yardeni, Could Real Estate Prices Fall? And What If They Do?,August 24, 1988

#15 Dr. Edward Yardeni and David Moss, The New Wave Manifesto, October 5, 1988

#16 Dr. Edward Yardeni with Amalia Quintana, The Baby Boom Chart Book,January 25, 1989

#17 Dr. Edward Yardeni, The Triumph Of Capitalism, August 1, 1989

#18 Dr. Edward Yardeni and Deborah Johnson, Dow 5000, May 9, 1990

#19 Dr. Edward Yardeni and David Moss, The Triumph Of Adam Smith, July 17, 1990

#20 Dr. Edward Yardeni, The Collapse Of Communism Is Bullish, September 4, 1991

#21 Dr. Edward Yardeni with Amalia Quintana, The Baby Boom Chart Book 1991,October 9, 1991

#22 Dr. Edward Yardeni, Apocalypse Now! (NOT!), May 8, 1992

#23 Dr. Edward Yardeni, The End Of The Cold War Is Bullish, September 10, 1993

#24 Dr. Edward Yardeni, Hard Or Soft Landing?, February 6, 1995

#25 Dr. Edward Yardeni, The High-Tech Revolution In The US of @, March 20, 1995

#26 Dr. Edward Yardeni, The US Economy’s Mega-Trends, July 10, 1995

#27 Dr. Edward Yardeni, 10,000 In 2000, November 6, 1995

#28 Dr. Edward Yardeni, Liquidity Story Is Wildly Bullish, February 12, 1996

Copyright (C) Deutsche Morgan Grenfell/C. J. Lawrence Inc. 1996. Allrights reserved. The information contained herein has been obtainedfrom sources believed to be reliable, but is not necessarily complete andits accuracy cannot be guaranteed. Any opinions expressed are subjectto change without notice. Deutsche Morgan Grenfell/C. J. Lawrence Inc.and its affiliated companies and/or individuals may, from time to time,own, have positions in, or options on the securities discussed hereinand may also perform financial advisory services, and/or have lendingor other credit relationships with those companies. This material hasbeen approved for distribution in the United Kingdom, to professionalinvestors who fall within the exemptions contained within the UK FinancialServices Act 1986 - Investment Advertisement Exemption Order 1988, byDeutsche Bank AG London, 6 Bishopsgate, London EC2P 2AT. Memberof the LSE and SFA, Tel:(171)971-7900, Fax:(171)971-7988. Orders placedby UK persons directly with Deutsche Morgan Grenfell/C. J. Lawrence Inc.will not be governed by all Investor Protection provisions of UK FinancialServices Act 1986. Additional Information Available on Request.

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