There are several reasons to be concerned about the current state of the U.S. economy. Hiring rates are sluggish, the housing market is sluggish, and credit costs remain high as Congress prepares a fiscal package that could increase the deficit. Despite these challenges, economic figures continue to show resilience, largely due to older Americans helping to prevent a recession. This demographic is less affected by labor market instability, less likely to struggle in the housing market, and stands to benefit from increased federal spending. The aging population is providing economic support during a weak economic cycle, a trend not as prominent in the mid-2000s or mid-2010s. A key indicator of this trend is the growth in Social Security beneficiaries. In 2024, a record 11,200 Americans turned 65 daily, compared to 10,000 daily in the previous decade. The number of Social Security beneficiaries has risen significantly, reaching 1.8 million in the last year alone. Retirees receiving Social Security may earn less than before, but macroeconomically, this represents additional income. Their retirements also create job vacancies or allow younger workers to retain positions in multigenerational workplaces. While a low-hiring and low-firing labor market isn’t ideal, the low layoff rate is still positive. Recessions harm Americans of all ages, but an economy where most people are employed, even if it’s hard to get hired or borrow, is preferable to mass layoffs. Comparing Social Security beneficiary growth to job growth highlights this trend. Between 2004 and 2006, the U.S. created 6.6 million jobs and 1.3 million Social Security beneficiaries. Between 2014 and 2016, it created 8 million jobs and 3.5 million beneficiaries. In the last year, 1.9 million jobs and 1.8 million beneficiaries were added, nearly a 1:1 ratio. Social Security adds 150,000 new incomes monthly, sustaining consumption and economic activity despite slow job growth. Many retirees also have additional income sources like pensions and investments. Americans aged 55 and older hold nearly 70% of the nation’s wealth. This group also supports the housing market, with 60% of household real estate wealth held by those aged 55 and above. Luxury homebuilder Toll Brothers Inc. noted that 24% of their buyers paid in cash, often using equity from existing properties. Older Americans are stabilizing the economic cycle, with 38 million aged 55 and above employed—a record high. However, while they help maintain budget deficits and interest rates, they also reduce private debt and hinder younger Americans from buying homes, contributing to stagnation. Stable economic data over the past two months suggests a significant shock would be needed to alter the economy’s course.
— new from bloomberglinea.com
