Tough math may spur millennial leaderhip in coming decade

Lack of discipline by baby boomers threatens to bring broad devaluation.

Christopher Lee of CEL Associates has a thesis that the U.S. economy is due for a broad devaluation, if not full-blown depression, in the late 2020s. To support this, he points to over-leveraged corporate and consumer borrowing, unchecked government spending, approaching bankruptcy of the Social Security and Medicare systems, social discord, tribalism, a growing retirement-age labor pool that can’t and won’t retire, and baby boomers who have discovered their accustomed consumption rate is not sustainable.

Others eyeing the same math draw the same conclusion, if maybe on a different date either side of roughly 2030.

Many of these conclusions were built on pre-Trump era assumptions, though. Will an increase in tax revenue tied to a new 4 percent GDP growth rate coupled with new trade deals allow us to avoid it?

If it continues, then the answer is probably yes.

The math, though, is tough stuff to digest and worrisome. Social Security and Medicare going to baby boomers as they grow older up against the ability of the remaining labor force to pay into the system doesn’t pencil. Borrowing to cover the deficit can last only so long, so we would have to agree to deploy some discipline somewhere in that math. Unfortunately, we seem deeply divided over the role of government, so our politics will likely wiggle and the current 4 percent GDP is unlikely to hold up over time.

The good news is there are immense opportunities created from these broad economic devaluations. Those who have some liquidity on hand as dry powder will lead the market out as they buy at the bottom of the cycle. Real estate investors will have particularly exciting opportunities and are likely to possess valuable skills learned from the great recession of 2008-2010 that hit financial institutions and real estate hardest.

Lee and others are very keen on an almost patriotic-sounding view that millennials will lead a “rebuilding of society” after the devaluation. Now in their 30s, theirs will be a new foundation of self-actualization, stability, consistency and dependability focusing on “the unique needs of customers of every kind” — including (or especially) those in the real estate industry, which touches every aspect of the economy.

By then, the entire big data structure to our economy will be replaced by new players with the Internet of Things (IoT) infiltrating everything. The old model of home construction might be replaced by much more affordable and efficient models; apartment living may change where the uberization of housing drives efficiency, and smart cities emerge as the place where millennials want to live and work.

Rebuilding society is a strong statement, but Lee’s probably right. The very idea that we would solve so many of our problems through government is fairly new and tied to a baby boomer generation that restructured society to its liking with its sheer mass. Since that isn’t sustainable, and the pain inflicted on or about 2030 could be deep, new ideas will emerge and millennials with skills, access to liquidity and ability may well lead America out.

Tom Hoban is chairman and co-founder of the Hoban Family Office, a real estate investment and services enterprise in Everett.

Talk to us

> Give us your news tips.

> Send us a letter to the editor.

> More Herald contact information.

More in Business

A closing sign hangs above the entrance of the Big Lots at Evergreen and Madison on Monday, July 22, 2024, in Everett, Washington. (Ryan Berry / The Herald)
Big Lots announces it will shutter Everett and Lynnwood stores

The Marysville store will remain open for now. The retailer reported declining sales in the first quarter of the year.

George Montemor poses for a photo in front of his office in Lynnwood, Washington on Tuesday, July 30, 2024.  (Annie Barker / The Herald)
Despite high mortgage rates, Snohomish County home market still competitive

Snohomish County homes priced from $550K to $850K are pulling in multiple offers and selling quickly.

Henry M. Jackson High School’s robotic team, Jack in the Bot, shake hands at the 2024 Indiana Robotics Invitational.(Henry M. Jackson High School)
Mill Creek robotics team — Jack in the Bot — wins big

Henry M. Jackson High School students took first place at the Indiana Robotic Invitational for the second year in a row.

The computer science and robotics and artificial intelligence department faculty includes (left to right) faculty department head Allison Obourn; Dean Carey Schroyer; Ishaani Priyadarshini; ROBAI department head Sirine Maalej and Charlene Lugli. PHOTO: Arutyun Sargsyan / Edmonds College.
Edmonds College to offer 2 new four-year degree programs

The college is accepting applications for bachelor programs in computer science as well as robotics and artificial intelligence.

FILE — Boeing 737 MAX8 airplanes on the assembly line at the Boeing plant in Renton, Wash., on March 27, 2019. Boeing said on Wednesday, Feb. 21, 2024, that it was shaking up the leadership in its commercial airplanes unit after a harrowing incident last month during which a piece fell off a 737 Max 9 jet in flight. (Ruth Fremson/The New York Times)
Federal judge rejects Boeing’s guilty plea related to 737 Max crashes

The plea agreement included a fine of up to $487 million and three years of probation.

Neetha Hsu practices a command with Marley, left, and Andie Holsten practices with Oshie, right, during a puppy training class at The Everett Zoom Room in Everett, Washington on Wednesday, July 3, 2024. (Annie Barker / The Herald)
Tricks of the trade: New Everett dog training gym is a people-pleaser

Everett Zoom Room offers training for puppies, dogs and their owners: “We don’t train dogs, we train the people who love them.”

Andy Bronson/ The Herald 

Everett mayor Ray Stephenson looks over the city on Tuesday, Jan. 5, 2015 in Everett, Wa. Stephanson sees  Utah’s “housing first” model – dealing with homelessness first before tackling related issues – is one Everett and Snohomish County should adopt.

Local:issuesStephanson

Shot on: 1/5/16
Economic Alliance taps former Everett mayor as CEO

Ray Stephanson will serve as the interim leader of the Snohomish County group.

Molbak's Garden + Home in Woodinville, Washington will close on Jan. 28. (Photo courtesy of Molbak's)
After tumultuous year, Molbak’s is being demolished in Woodinville

The beloved garden store closed in January. And a fundraising initiative to revitalize the space fell short.

Everett Mayor Cassie Franklin, Advanced Manufacturing Skills Center executive director Larry Cluphf, Boeing Director of manufacturing and safety Cameron Myers, Edmonds College President Amit Singh, U.S. Rep. Rick Larsen, and Snohomish County Executive Dave Somers participate in a ribbon-cutting ceremony on Tuesday, July 2 celebrating the opening of a new fuselage training lab at Paine Field. Credit: Arutyun Sargsyan / Edmonds College
‘Magic happens’: Paine Field aerospace center dedicates new hands-on lab

Last month, Edmonds College officials cut the ribbon on a new training lab — a section of a 12-ton Boeing 767 tanker.

Gov. Jay Inslee presents CEO Fredrik Hellstrom with the Swedish flag during a grand opening ceremony for Sweden-based Echandia on Tuesday, July 30, 2024, in Marysville, Washington. (Ryan Berry / The Herald)
Swedish battery maker opens first U.S. facility in Marysville

Echandia’s marine battery systems power everything from tug boats to passenger and car ferries.

Helion Energy CEO and co-founder David Kirtley talks to Governor Jay Inslee about Trenta, Helion’s 6th fusion prototype, during a tour of their facility on Tuesday, July 9, 2024 in Everett, Washington. (Olivia Vanni / The Herald)
State grants Everett-based Helion a fusion energy license

The permit allows Helion to use radioactive materials to operate the company’s fusion generator.

People walk past the new J.sweets storefront in Alderwood Mall on Thursday, July 25, 2024, in Lynnwood, Washington. (Olivia Vanni / The Herald)
New Japanese-style sweets shop to open in Lynnwood

J. Sweets, offering traditional Japanese and western style treats opens, could open by early August at the Alderwood mall.

Support local journalism

If you value local news, make a gift now to support the trusted journalism you get in The Daily Herald. Donations processed in this system are not tax deductible.