‘More reliant than ever on Gov’t aid’
‘More reliant than ever on Gov’t aid’
Transfer income is playing a bigger and bigger role, but it's not because we're lazy
Programming note: Random Walk will be on hiatus until next week when the calendar turns to 5785.
transfernation, or Father Time is Undefeated
failure to launch (a boon for travel spending)!
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It really cannot be emphasized enough that the single most important issue for this country (and for lots of others) is babymaking.
Or really, the lack thereof.
The WSJ ran a cover story (citing research from the EIG) on the nation’s growing reliance on government aid.
But it’s really a story about getting old.
I mean, it’s also a story about hubris, near-sightedness, and the political economy of inertia, but mostly it’s about getting old.
Transfernation
Random Walk doesn’t have much to add to the story I’ve been telling for a while now (as have others), but the visuals are pretty, so I pulled some choice ones.
Total transfer income is growing exponentially:
Transfer payments have quadrupled since 1990. The drivers are getting old, and having the state pay for more healthcare on behalf of more people (which naturally drives costs up).
The number of older Americans is also growing:
There are now just under 60M seniors, and the largest generation is just getting to grey.
The rate and pace of growth sneaks up on you, too. “In percentage terms, the 65+ share of the population rose as much in the 10 years from 2010-2020, as it did in the 50 years, from 1960 to 2010.”
It’s scaremongering, until suddenly it isn’t. Non-linear growth is a jerk like that.
Per capita transfer income has grown nearly three times faster than other income over the last 50 years
Medicaid and Medicare are running away from the pack.
Look, taking care of old people is pretty important, even if one can reasonably disagree on the proper mechanisms.
Still, when the generation of our great cultural revolution decided to gift themselves perma-pensions and nursing homes to be paid for by the grandchildren they determined not to have,1I wish I had been there so that I could tell them to get off my lawn.
Hey, but on the plus side, this all shows up as GDP, so everything is probably fine.
Failure to launch (a boon for travel spending!)
And look, in the meantime, holiday earnings season should be a real banger.
We already saw that holiday shopping is forecast to be gangbusters, and it looks like at least some segments of travel are holding up alright too.
Which ones?
The younger ones:
Younger consumers are still growing their travel spend (while everyone else cuts back and Economy hotels flourish).
And why is that? Well, among other reasons:
Delayed Major Life Events: Many younger consumers are delaying major life events such as buying homes or starting families, freeing up more disposable income for travel and leisure activities.
The important thing is that young folks freed up more disposable income for travel and leisure.
Anecdata about “delayed major life events” always remind me of this chart (which circulates in various iterations):
I sure wish Bloomberg didn’t use so many different y-axes, but the point is that today’s 30 year-olds are a few life stages behind their parents at equivalent ages.
Whatever intergenerational transfers were contemplated, something definitely got lost in transmission.
That Medicaid don’t pay itself sonny. Better get crackalackin’.
Lol. Good luck old man. You’re on your own.
Heh. Wait ‘til you learn about the Fed. Have fun buying a house.
Previously, on Random Walk
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Such that would-be grandparents decide these things, and I believe that they do, to at least some extent.
Doom spending. Very sad.
Do delayed life events model against longer modern lifespans ie is the true analysis elongation of a life phase such that on a percentage basis it is equivalent to 50 years ago? Maybe not exactly, but is this part of the answer?