PARTING SHOT

Here are answers to some of clients ’ most frequently asked questions .

ECENTLY , A FINANCIAL ADVISOR EMAILED ME , ASKING for help in addressing some client questions .

One client had attended a financial seminar in which the speaker had argued that , with the baby boom generation dying off after 2030 , the economy was headed for collapse . Consequently , the speaker told the crowd , they should sell their businesses and other assets and buy gold . Other clients had asked the financial advisor whether the rising federal debt must inevitably destroy both the U . S . economy and the dollar ’ s position as the world ’ s reserve currency .

Over the years , I have been asked many times by financial advisors about these and other apocalyptic scenarios . To be clear , these questions do not spring from the genuine concerns of financial advisors or even the diligent research of their clients . Rather they arise because investors are on the receiving end of messages from prophets of doom , delivered online , via radio shows or in person . These soothsayers make a living from hoarsely barking out assertions of disaster , without any proof or even any academically sound investigation . The “ tell ,” of course , comes in the pitch at the end . Because of the imminent disaster , you should sell all your assets and buy gold , or bitcoin , or canned goods and ammunition … and luckily , they just happen to have gold and bitcoin and a moderate supply of canned goods and ammunition in their shed out back .

Demographics And Growth That being said , the first and best defense against such charlatans is a basic understanding of the issues at hand . First , demographics do not doom the United States to recession . The U . S . working age population is growing relatively slowly . The Bureau of Labor Statistics estimates that the U . S . population aged 18 to 64 grew by less than 0.1 % over the past year . In addition , long-term Census projections , released last November , projected annual growth in 18- to 64-year-olds of 0.1 % for the rest of this decade and 0.2 % for the next decade .

However , it should be noted that these forecasts assume annual net immigration of less than 900,000 between now and 2040 . This is likely an underestimate based on recent migration trends and , while we clearly need comprehensive immigration reform , it should be recognized that over 70 % of net immigrants are aged 18 to 64 , and thus in their prime working years compared with less than 60 % of the existing population .

It should also be noted that the labor force participation rate for the population aged 18 to 64 has actually been rising in recent years and hit a 15-year high in April .

Consequently , in contrast to nations like Germany , Japan , Italy and China , the supply of workers to the U . S . economy should continue to grow in the years ahead . In addition , the U . S . workforce continues to become more productive . While real GDP per worker increased by only 1.3 % per year in the first two decades of this century it has risen at an annual pace of 1.7 % since then , despite the disruption from the pandemic . With abundant investment in AI and robotic technologies , productivity growth could well accelerate from this pace in the years ahead .

Since peaking in 9.1 % year-overyear in June 2022 , the U . S . CPI inflation rate has fallen to 2.9 % in July of this year and is on track to drop below 2.0 % early next year .

In our consumer-driven economy , an economy producing more jobs , more income and more output should also continue to generate the demand for that continued on page 58

60 | FINANCIAL ADVISOR MAGAZINE | OCTOBER 2024 WWW . FA-MAG . COM