Zeev's Turnips Patch-No Politics (ZEEV)

[Lane Hall-Witt]

ergo sum--

First, of course, all discussions of Social Security's future should acknowledge that demographic and economic projections 15, 35, 75 years into the future are made up of perhaps 5 percent science, 5 percent black magic, and 90 percent hope -- with a margin of error of plus-or-minus 100 percent. <G> So I take all of the numbers we're tossing around with considerable skepticism.

Despite the quote you cite regarding birth rates and the future workforce, the report does try to account for a variety of other factors, including rates of immigration, pay scales, the rate of women's entry into the workforce, etc. The "Assumptions" section at the end of the report is suggestive of factors, in addition to birth rate, that they're trying to accommodate. I haven't read any detailed account of the methodology behind the report, but I don't see any reason to believe that it is only drawing on birth rates in order to project the future composition of the workforce.

On a few other points:

(1) There's an important factor that we haven't discussed in trying to assess how large the Boomer population is relative to other age cohorts: people die. According to the Census Bureau statistics you cited yesterday, there are approximately 39.7 million people ages 0-9 years; 40.7 million, 10-19; 38.3 million, 20-29; 43.2 million, 30-39; 42.5 million, 40-49; 31.0 million, 50-59; 20.3 million, 60-69. On the surface, it looks like we'll simply be able to slot in the 79.0 million 10-29 cohort to replace the 73.5 million 40-59 cohort. But we also must ask what toll the death rate will have on the 10-29 cohort as they reach age 40-59. There won't be 79 million of them in 2020. (I don't know what death rate the actuaries are projecting for the 10-29 cohort over the next two decades.)

http://www.investorshub.com/boards/read_msg.asp?message_id=496230

(2) Looking at Tables 4 and 5 of Statistical Abstracts, we can get a sense of the relative number of newborns and immigrants. In 1991-1998, there were 31.745 million newborns and 7.605 million immigrants, about 4.2 newborms for each immigrant. If we toss out 1991 as a year of exceptionally high immigration (1.827 million in that one year alone), then in 1992-1998 there were 27.634 million newborns and 5.778 million immigrants, or about 4.8 newborns per immigrant. The emphasis on the birth rate throughout the report doubtless stems from this ratio of newborns to immigrants. This said, it's true that the immigration rate has grown since World War Two, while the birth rate has been in decline; but we still have quite a way to go before immigration can fully offset the "domestic" demographic trends that have emerged in recent decades.

http://www.census.gov/prod/2002pubs/01statab/pop.pdf

(3) I'm not sure what you mean by a 37 percent increase in citizens, and it having nothing to do with birth rate. The population increased by a bit more than 13 percent, 1990-2000, and there were more than 40 million births.

Just to tie this into the market, I'll reiterate that my interest in all of this is the long-term effect of the Boomer phenomenon on fund flows and financial-market liquidity over the next few decades. (I'm 36, so my long-term financial planning demands such an expansive time horizon.) According to the projections in the Social Security Advisory Board's report, the Social Security Trust Fund will have to start cashing out of the U.S. Treasury market in 2016. The sucking sounds we'll hear then will be a few trillion dollars being drawn out of the global credit market. That's going to be a major liquidity event, with today's biggest buyer of U.S. Treasuries showing up within the next couple of decades as a seller -- and, on these projections (whatever they're worth), looking to unload its entire position within 22 years!

LTBH is "safe" if your time frame is 10-20 years, huh? <G>