Leading Economists Predict a Grim Future…and Identify Who the Winners and Losers Will Be
Authors and economists Brian and Alan Beaulieu insist that current government spending patterns, in light of our nation’s demographic trends, are unsustainable. Their new book explains why—and identifies the winners and losers of the coming economic catastrophe.
Hoboken, NJ (July 2014)—Economic turbulence is the new normal. And if the ups and downs have you wondering what the future holds, Brian and Alan Beaulieu say it’s a good news/bad news/good news story.
The good news: Economists predict that during the next three years—2015, 2016, 2017—we’ll see solid economic growth.
The bad news: That growth won’t last. In fact, if serious changes aren’t made, the U.S. economy could plunge into another Great Depression during the 2030s.
The other good news: You, personally, don’t have to go down with the ship. If you make the right financial moves now, you can safeguard your own family’s well-being.
“Let’s focus first on that bombshell in the middle,” says Brian Beaulieu, who along with Alan Beaulieu wrote Prosperity in the Age of Decline: How to Lead Your Business and Preserve Wealth Through the Coming Business Cycles (Wiley, 2014, ISBN: 978-1-118-80989-1, $30.00). “For various reasons, chief among them the aging population and the entitlement programs tied to aging, our current system is not viable. We will go broke and experience the Great Depression of the 2030s unless something changes.”
In Prosperity in the Age of Decline, Brian Beaulieu, the CEO of the Institute for Trend Research (ITR®) Economics, and Alan Beaulieu, the president of ITR, offer an informed, meticulously researched look at the future and the coming Great Depression. In this important resource, the authors reveal what it will take for individual investors and business leaders to prosper as the economy heats up prior to the predicted downturn, preserve wealth in the upcoming Great Depression, and profit on the way out of the depression.
Sobering stuff, indeed. But to return for a moment to the second “good news” bookend, “The U.S. economy is huge, and there is an amazing amount of maneuvering room on a microeconomic level,” notes Alan Beaulieu. “While it may be extremely difficult or impossible to alter some of the demographic and entitlement spending trends as we head toward 2030, it is very possible for us as individuals to take action to safeguard our family’s financial well-being.”
Read on as the Beaulieus explain who will be the winners and who will be the losers in the coming Great Depression.
The Winners
- People who save or contribute to their 401(k)s. People of every demographic who create an effective combination of saving and investing will be better prepared for the coming Great Depression than those who don’t. The savers/investors will be able to augment government retirement and medical program costs to maintain a reasonable standard of living.
“It is our hope that this book will engender an urgent need to do so as well as provide a how-to guide to save and invest efficaciously,” says B. Beaulieu. “Saving alone won’t do the trick because inflation will eat into the value of the dollar ($1 in 2030 will buy a lot less than $1 can buy in 2014).” - Businesses that focus on countries or regions with comparatively young populations. Whether a business focuses only on the next year or the next 10 years, expending capital and energy in China may make sense. However, if a firm is looking further down the road for the better growth percentages, it will have to turn to where there is an expanding middle class, not a shrinking middle class.
“Those countries with inverted people pyramids are not the ones where middle-class expansion will organically occur,” notes A. Beaulieu. - Firms that are gearing efforts toward the Latino and Hispanic segment of the population. The Hispanic community in 2005 constituted 14 percent of the U.S. population; whites constituted 67 percent. By 2030 Hispanics will account for 29 percent of the total population, and whites will be at 47 percent.
“There is a tremendous surge of Hispanic culture, language, and needs coming our way that successful businesses will pay attention to if they want to gain market share and enjoy relative prosperity, even during the coming Great Depression,” says B. Beaulieu. “African Americans will be relatively constant at 13 percent of the population (same as 2005), and the Asian population will grow to 9 percent of the total from 5 percent in 2005.” - Firms that develop niche products and services dealing with the elderly. (Keep in mind this slice of the pie will stop growing in the 2030-2040 decade.) Be it independent living facilities, skilled nursing homes, special dietary needs, personal care requirements, travel needs, entertainment, or whatever you can think of (the list goes on and on), catering to the needs of those 65 and older will be a growth industry between now and 2030.
“In the United States, the market will cease to grow as a percentage of the whole population after 2030, so expect pricing to become more competitive and the field to become more crowded beginning in the Great Depression of the 2030s,” explains A. Beaulieu. “Turning to older populations outside the United States will also prove to be a winning strategy.”
The Losers
- Generation Y (born 1981–2000). Our concern for generation Y regarding the 2030s depression is twofold. One, it is going to have to care for a disproportionately large elderly population. This is both costly (financially and emotionally) and time-consuming. Two, it will be entering its peak earning years around the time the United States and the rest of the globe is slipping into what looks to be a decade-long depression. Unless they are especially prepared (another reason for this book), they will become the economically lost generation.
“One remedy for the coming financial troubles is for the retirement age to be increased,” notes B. Beaulieu. “We are healthy enough to work longer, and we may need to because most Americans are not ?nancially prepared for retirement. If people are ?nancially encouraged to work longer, they are less dependent upon the economy, and the government is in a position where it does not need to support them. The economic solution seems clear, but no doubt it will be extremely difficult to achieve politically. That’s because the elderly vote in such high numbers. - “One of the ways that the younger generations can save themselves is to increase their voter participation,” he adds. “The elderly vote in higher numbers as a group than the 20- to 39-year-olds do. Politicians want to be reelected. The younger voters are going to need to give politicians a reason to make the logical economic choice of raising the retirement age enough to avert the ?nancial stress that’s going to fall on their shoulders.”
- People 65 and older who haven’t created a nest egg. There is a coming stress point where retirement and medical benefits will be reduced, be delayed, or cost more. Any way you look at it, people who are relying on the system to provide for them in their elder years are likely to experience a significant drop in their standard of living. That will be especially true for people who will be reaching retirement age during the 2030s. If they haven’t put away a sufficient nest egg, then they will find themselves in financial trouble. There simply won’t be a social safety net to keep them afloat.
“The good news is it seems people are putting more money into their nest eggs,” says A. Beaulieu. “The median income for people aged 65 and older in 2011 was $19,939. That doesn’t seem like much but it is actually up 10.9 percent from 10 years earlier (adjusted for inflation.) So it does seem that people are getting the message about needing to take care of themselves and not relying on Social Security. And we think this trend toward higher in?ation-adjusted incomes provides maneuvering room for altering bene?ts in the future. But for now, people in general depend on Social Security.” - Incumbent politicians. The political choices that face us between now and 2030 are going to range from painful to dangerous. In the end, doing the economically right thing is not likely to win votes for reelection. “Additionally, anyone in office as we head into a Great Depression is going to have a difficult time justifying why they should be reelected,” says B. Beaulieu. “Politics as a career between 2025–2034 is something generation Y should avoid if they are going to try to earn a consistent wage during the depression.”
- Taxpayers. Reduce benefits or raise taxes will be the primary choices confronting politicians. The path of least resistance will be to increase taxes on the rich. “That is an interesting concept because politicians will get to decide who the rich are,” notes A. Beaulieu. “Most likely they will construe the rich as those with higher incomes or with substantial assets. The rich today pay most of the taxes the government receives. Get ready to pony up even more money in the future.”
“There are turbulent years ahead, but if we can weather them, there will be calmer waters on the other side,” says B. Beaulieu. “Looking past the Great Depression of the 2030s, the U.S. will be in a relatively good position. Our dependency ratio will have leveled off, and our younger population will be growing. That said, it is important for individuals to take steps now to set themselves up for the coming hard times they may endure during the depression.”
Your Great Depression Action Plan: Six Things to Do Right Now to Prepare for the Collapse of 2030
The thought that a second “Great Depression” is heading our way in 15 years or so is more than a little scary. But the remedy for fear is action. And since you know economic trouble is coming, you can start taking steps now to prepare for it. Follow the tips below from authors Brian and Alan Beaulieu and you can not only survive but thrive during the coming Great Depression:
Live below your means and invest in your future
Nearly everyone should save some money from each paycheck and use these savings to invest in equities as the 2020s should provide a better-than-in?ation return on investment. “The goal,” says Brian Beaulieu, “is to maximize the nest egg so that people who are poised to retire or who lose their jobs won’t be destitute and depend on a government that has lost the wherewithal to provide generous entitlements.”
Create multiple income streams
Every household, even if yours is just a household of one, should have multiple income streams. This way, when one source of cash comes under pressure or fails, the other will be there to help maintain the household. Dividends and rental property make excellent sources of additional income that can be saved for future use.
Don’t work in the same industry as other members of your household
Two wage earners in the same household should be careful that they are not working for the same company or even within the same industry. For instance, having both earners in the machinery export business all but guarantees both incomes will be negatively affected at the same time during a down cycle. Two teachers in the same school system might face simultaneous cutbacks and layoffs.
“Households need to diversify when possible,” explains Alan Beaulieu. “For example, one in business and the other in law enforcement, in the ?re department, in the medical ?eld, in the insurance industry, in teaching, or in caring for senior citizens. Two incomes in business or in the same ?eld will dramatically increase the risk of ?nancial troubles.”
Establish an income that’s connected to one of the Great Depression drivers: demographics or information
A field of study and career in the pursuit of making life better, healthier, longer, or with an improved lifestyle will be great business with the world’s population growing by a billion people between now and the middle of this century. Also in this category of demographic opportunity is the ?eld of entertainment. As the middle class on planet Earth expands, leisure time in search of entertainment is likely to be a burgeoning and potentially lucrative ?eld.
“In the information arena, natural resources warrant a primary focus for students and professionals,” says B. Beaulieu. “Harvesting and conserving natural resources will be very important and ultimately complementary endeavors in an age when the intrinsic value of natural resources is climbing.”
Pay off your entire debt load
…or at least as much as possible, by 2030. At minimum, pay off your mortgage and any car loans by 2030. Credit card collectors can be nasty, but they cannot take your home. Student loans should be paid off if possible, but failure here will also not bring about homelessness. “Of course, the best advice is to have everything paid off—this provides for the highest amount of available cash in the event of dramatic income reduction,” notes A. Beaulieu. “No one can repossess what you own outright. Protect your future by planning how you will be debt free by 2030.”
Be ready to invest when it all comes crashing down
Doing the preceding three things will provide the opportunity for great wealth creation. The stock market will crash in the depression, which means equity prices on great companies will be cheap. People with cash can move in and create future fortunes by being ready to buy. Those who will use the depression to their advantage will also be ready to buy real estate, as those values and their rental incomes will surely escalate in a post-depression economy.
“Last, if you’re an entrepreneur or business owner, be ready to buy businesses in their entirety, because the aging demographic and the sour economy will produce incredible deals on entities that will eventually once again be sound, cash-producing businesses,” says B. Beaulieu. “Look for competitors who are running out of hope and cash—or seek out these attributes in entirely new ?elds—and you will ?nd that you have created the basis for a business empire that may make you and your offspring very wealthy in the 2040s and beyond.”
“Most people will fear the coming Great Depression and will hope only to survive,” concludes A. Beaulieu. “The steps outlined here will turn the worst economic downturn in a century into the opportunity of a lifetime. But the preparation needs to begin now.”
About the Authors:
Brian Beaulieu is an economist, principal, and CEO with ITR® Economics. At ITR, Brian has been leading the charge in applied research regarding business cycle trend analysis and the utilization of that research at a practical business level. Brian consults with companies worldwide and has provided valuable insight to business owners and executives for 27 years with the result being increased profitability and greater awareness of business cycle opportunities.
Alan Beaulieu is a principal and the president of ITR® Economics. Alan is also the senior economic advisor to a variety of U.S. and European trade associations. He is the keynote speaker at corporate and trade association meetings worldwide where he provides clear economics forecasts and proven profit-enhancing strategies to businesses across a wide spectrum of industries. Alan’s knowledge and expertise are in great demand, as evidenced by his extremely busy calendar that includes 120 speaking engagements a year.
About the Book:
Prosperity in the Age of Decline: How to Lead Your Business and Preserve Wealth Through the Coming Business Cycles (Wiley, 2014, ISBN: 978-1-118-80989-1, $30.00) is available at bookstores nationwide, from major online booksellers, and direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797. For more information, please visit the book’s page on www.wiley.com.
