How is the US out of demand? Peak consumption years of population are between twenties and fifties and the biggest cohort of US demographics - the millennials - is just getting started. They crossed over the Boomers last year and now are the largest group. Behind them the younger (Gen Z) equally large in size is ready to backfill in another 15 years. It is true that demand from Boomers is done, but the Gen X's are not big enough to backfill the falling demand.
The US is out of demand because wages for Gen X and millennials have been minimized by decades of shift in the power balance between employers & labor, on top of that, many millennials have been saddled with much higher education costs compared to Gen X and especially the Boomer generation. So even as careers progress and wages rise due to experience, some of that margin of money isn't going to disposable consumer spending, it's going to go to loan repayment. That money then spends more time circulating in the financial service sector vs other sectors where there is a greater amount of real value creation and real growth.
Genx and y are hit pretty hard between increased taxes to take care of Boomer retirement entitlements, public sector union pensions and other 1970s deals coming to roost, and significant student debt. These are expenses the previous generations didn't have to worry about.
With a lower tax load and no student loan payments, my economic life would be fairly different. At least a second car, definitely more travel, nicer house, more random spending, etc. When we do hiring here I'm floored by how low entry-level salaries are for people with 4 year degrees and 1-4 years of work. Hell, we opened a coordinator level position recently and got resumes for people mid-career dying for work.
I think the economic picture isn't as pretty as some stats make it out to be. x, y, and z just won't have Boomer wealth and our economy must adapt to that. Its not the end of the world, but it won't be like the Clinton years again.
Also, there's a pretty rough calculation in regards to real estate prices vs income. A middle class income in the 70s got you a decent house with a reasonable percentage of your salary to pay for it. That relationship is kinda crazy now as high real estate prices have become the norm. I couldn't afford my parent's house I grew up in and I make 3 to 4x what they made. Fixed for inflation, I make easily 2x what they made.
> Peak consumption years of population are between twenties and fifties and the biggest cohort of US demographics - the millennials - is just getting started.
They have no money to spend and little to spend it on. This has a ripple effect.
Many of them don't want to buy cars--Uber/Lyft allows them to dodge that (for now). Lots of them aren't getting married--this then drops spending of the household since they don't have children which sucks up vast amounts of resources. etc.
And what good is a large population of people in their peak consumption years if they have no money with which to consume?
So long as you have a low-paid workforce who have to save their money (either themselves or via insurance companies) in case they get an infected tooth or need to see a doctor for an antibiotic prescription, you'll have low consumption spending and low growth.
even medium to highly paid workforce members aren't entirely capable of spending en masse these days.
I'd love to stop paying $3500/month in rent, but any property to buy around here has a median price of $1.2 million. Unless we all move to rural Indiana, housing + healthcare is designed to eat 100% of your after-tax income with no room for further growth.
(of course, that's assuming you're just a putz serial employee like myself and not a wise investor who can share the success of 1,000 companies at once without having to do any real work yourself.)
There is a lot of middle ground between the valley and rural Indiana. Depending on how you drove to get there, the northern route would take you through Salt Lake City, just north of Denver, Omaha, Des Moines, and just south of Chicago. A southern route would take you north of Phoenix, Albuquerque, Oklahoma City, just east of St. Louis, and possibly through Indianapolis. I would bet every one of those cities would have multiple opportunities for medium-highly paid workforce members while also providing affordable housing.
In Portland, OR, my healthcare is 4% and my 2k+ house in the burbs (30 min commute) is <20%.
At $3500/mo (about $750k house), there are over 500 house available right now[0] just in the actual city of Portland (not including suburbs). And that's just limiting it to 2bd 1.25ba (and above) detached houses (not including condos, duplexes, etc)
It's totally possible to work and live somewhere other than California.
It's obviously a smaller market. I'm just suggesting that it's possible, and providing some anecdata.
From a real standard of living, the cut in pay is overwhelming made up by the fact that I live in my own detached 2k+ sqft house on a .25 acre of land (and at significantly less than $3500/mo). Again, just looking at the city of SF directly, there are 13 homes for sale under $750k with a min of 2bd/1.25ba. Take a pay cut, have access to 40 times as many houses.
It's possible to do software development and not pay $3500. Which was what the above poster was talking about "I'd love to stop paying $3500/month in rent, but any property to buy around here has a median price of $1.2 million."
the most important differentiation between Portland and SF?
Also, the most important differentiation between Portland and SF is the weather. Anyone will skill can get a job here (I've never had to look more than a couple weeks).
How many software developer jobs do you need? 1222 sounds like it would provide quite a bit of choice. Plus, there's probably fewer people looking for those jobs in Portland. Not to mention the fact that the salary is 20% higher in SF, but rent is 60% higher in SF [1]. I'd say that's a pretty big win for Portland.
Yeah but rain. I lived in Oregon for 22 years, and I've been living in California since 2012 and although its been through a drought, let me tell you some things I don't miss after being back in Oregon for the holidays.
Waking up to gray, gloomy skies, with rain pouring down.
Waking up to the dark at 7am in the Winter.
Sunset at 4:30.
It actually gets cold haha.
The summers are amazing though!
You get spoiled living here and thats why people like it.
Atlanta has a great tech scene, and the housing costs are extremely affordable. I pay $900/mo rent for two bedrooms and one bathroom in the extremely popular Inman Park neighborhood. I draw the same salary that my coworkers in SF do and don't have to worry about rent, state taxes, or anything of the sort. The Atlanta food and art scenes are great. We have wonderful communities, lots of events, and the weather is pretty great.
Lots of millennials are deep in debt due to student loans. Also, with jobs being more precarious, I wouldn't be surprised to see a much higher individual saving rate for the millennial cohort. This would then correspond with lower aggregate discretionary consumption.
>the biggest cohort of US demographics - the millennials - is just getting started
As a millennial, this is hilarious to me. I hope your startup doesn't depend on millennials consuming ANYTHING. The best you can MAYBE achieve is having people disable their adblocker.
How is the US out of demand? Peak consumption years of population are between twenties and fifties and the biggest cohort of US demographics - the millennials - is just getting started. They crossed over the Boomers last year and now are the largest group. Behind them the younger (Gen Z) equally large in size is ready to backfill in another 15 years. It is true that demand from Boomers is done, but the Gen X's are not big enough to backfill the falling demand.