Chart of the Day
Focusing interest rates and demographics today. First off, safe asset interest rates have been trending downward for much longer than most of us recognize. 700 years(!) per a Bank of England working paper.
Source: Bank of England
Second, long term demographic growth in the US is slowing substantially. This means less workers to support a larger number of retirees, which leads to lower growth and typically lower rates (see Japan).
Bad as that chart above looks, we are still better off than the rest of the developed world which is hitting a demographic wall in the coming decades when it comes to working age population.
Source: United States Census
Pretty much the only place on earth that will see substantial working age population growth starting around 2050 will be sub-Saharan Africa.
Source: IMF
Even with considering central bank actions during the pandemic, does this seem like the sort of macro backdrop – especially when coupled with increasing technological adoption – that would allow for accelerating, sustainable inflation? I doubt it.
Basis Points – A candid look at the economy, real estate, and other things sometimes related.
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