I got a kick out of
this article on Seeking Alpha.
The author of this blog advertises his service as "Author of High Dividend Opportunities. The #1 Service for Income Investors and Retirees, 9-10% dividend yield".
This financial writer's audience is a conservative crowd if there ever was one. He certainly has no incentive to promote liberal ideology. He's quite critical of Biden's policies. His article is pretty long, and you might have to register to read the whole thing, so I'll quote the relevant points. Any interpretation of financial markets requires perspective on the economy in general, and so here's his explanation for why we're living in fragile times.
Today, the situation is even more critical. We are just out of a recession with the economy more fragile than in the past decade. Any false move by the Fed or premature hike would throw the economy back into a recession. Furthermore, the Fed has learned the economy can no longer withstand an increase in Fed Fund rates of more than probably 2%. We are no longer in the golden years where the economy can withstand Fed rates of 5% or more.
The main, and interrelated, reasons:
An ever-weakening economy due to declining population growth.
A Fed that's re-setting interest rates lower each time there is a market crash.
We have been witnessing a secular declining population growth rate in the United States since the 1980s. This has resulted in a more fragile economy that is prone to more recessions.
In fact, during the past decade, the US population grew at the slowest rate since the 1930s (which coincided with the Great Depression), as reported by the Census Bureau in April 2021. It's expected that the U.S. population will grow in 2021 at a rate of only 0.58%. This is about half of the growth rate of the year 2000, which is quite alarming.
A growing population is one of the biggest drivers of economic growth. In fact, economic activity is dependent on the number of people available to make things and/or provide services, multiplied by how productive those people are. This means that slower population growth will directly equate to slower economic growth. Lower population growth also will mean lower consumption, and the United States is a consumer-driven economy. Once the economy loses that, it loses its biggest driver and becomes vulnerable to all kinds of small economic shocks.
So, Ajax, unless you and your neighbors are willing to sacrifice and pump out more kids, we're going to need to swing those borders wide open.
