Baby Boomer Retirees Signal Huge Shift in Future Economy

As baby boomers retire, the "tectonic plates" of the labor markets are shifting, according to Kristalina Georgieva, Managing Director of the International Monetary Fund.

The economy of the future is in flux, Georgieva told patrons at an event in Brussels, Belgium – mostly due to the large number of employed Baby Boomers now seeking retirement in the post-pandemic world. This sentiment is shared by numerous experts in the field, including Agustin Carstens, the Chief Executive Officer of the Bank for International Settlements. He told central bankers at a retreat last month that the low-inflation economic growth experienced in the 1990s is now beginning to dwindle due to excessive federal governmental debt. Rather than reforming policies during a period of economic strength, Carstens said, the federal government leveraged globalization to take on strategic debt to strive for even greater growth. This leads us to today, where the economy was not prepared for the many issues the COVID-19 pandemic and Russian aggression caused.

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Additionally, Georgieva adds, Baby Boomers are becoming the majority throughout Europe, China, and the United States. American Baby Boomers will all have reached the age of retirement by 2030, causing a dip in the labor force and increasing inflation even more. Over half of the decrease in labor force participants over the past two years had been due to the retirement of Baby Boomers, according to the U.S. Federal Reserve, and the concern is that we're heading toward an economy with decreased labor resources. Ultimately, fewer workers could require tighter monetary policies and higher wages.

"We may be approaching what in aviation is called a 'coffin corner,' the delicate spot when an aircraft slows to below its stall speed and cannot generate enough lift to maintain its altitude," Carsten told Reuters. "It takes skilled piloting to get the aircraft back to a safer, stable place."