Bidenomics: Financial Difficulties Causing Fewer Gen Zers to Get Engaged

 

Marriage is a key life milestone and engagements are a step towards married life.  However, the economic state of young Americans is so poor that fewer Gen Zers are choosing to get engaged.  

Signet Jewelers, the parent company of Kay Jewelers and Zales reports that the upswing in engagements that they predicted post-COVID is not working out as planned.  

Signet Jewelers Ltd., the parent company of Kay Jewelers and Zales, had previously signaled to investors that there would be an upswing in US engagements this year as dating patterns returned to normal. But that forecast was downgraded on Wednesday as the jeweler warned that persistently high inflation and job market uncertainty have forced some young folks to delay engagements. 

"If right now they're worried about their jobs or they're still paying a little bit more for rent or for gas, then they might wait a few months for that engagement," Gina Drosos, the CEO of SignetSignet, explained in a Wednesday interview quoted by Bloomberg.

Drosos said 2.1 million couples were engaged last year, the lowest in years, but recovered from the dating dry spell during Covid. Still, the number is well below the 2.8 million level seen pre-2020. 

The downshift in the outlook comes after three years of elevated inflation, which has strained consumers' finances. 

 

Switzerland Votes to Fleece Its Kids

 

The Swiss might have a reputation for thrift and self-discipline.  However, the results of Switzerland’s March 3 pension referenda show that even the Swiss have no taste for entitlement reform.  If pension reform is a political non-starter in Switzerland, why should young Americans have any hope that Washington will save Social Security? 

On Sunday 58% of Swiss voters decided to give themselves a pension raise and stick their kids with the bill. 

The raise took the form of a thirteen monthly pension check.  Starting in 2026, every Swiss pensioner will get a double payment in the month of November.  Payments in the other months will remain the same.  This amounts to an 8% pay raise for every pensioner, every year, forever. 

A sweet deal if you can get it.

Younger Swiss voters opposed the pay boost.  The vote reflects a generational divide.  Fifty-five percent of voters under 40 opposed the pension hike.  Older Swiss voters showed that they had no qualms about fleecing younger generations. 

Swiss voters also rejected by a margin of 75% to just 25% a proposal to raise the pension age from 65 to 66 by 2033.   

The proposal to raise the pension age was put forward by the Young Radical-Liberals.  The group gathered 145,000 signatures to put the referendum on the ballot. 

The Radical-Liberal Party, better known as the Free Democratic Party or the Liberals, is Switzerland’s classical liberal party.  The Free Democrats are the fourth largest party in the Swiss National Council.  The Young Radical-Liberals are the youth wing of the Free Democrats.

The proposal for the pension raise was put forth by labor unions and Swiss left-wing parties.  Unions and left-wing parties also opposed the increase in the pension age. 

Young people in Switzerland and elsewhere should take note:  unions and the left are not on your side. 

Switzerland badly needs pension reform.  The country is running out of young people.  Swiss government pensions are funded on a pay-as-you-go basis.  Low birth rates mean that the number of Swiss workers per pensioner is going to collapse in the near future. 

Below is the population pyramid of Switzerland.  The Switzerland is about to experience as wave of retirements as the Swiss equivalent of the Baby Boomers and Gen Xers are reaching retirement age in the next decade and a half.    

The results of the Swiss referenda show how unlikely it is that voters or politicians will enact reforms that put entitlements on a sustainable path. 

America also has a generational divide on entitlements.  As in Switzerland, young Americans are more likely to support changes to Social Security like cutting benefits or raising the retirement age.  A majority of older voters and organized interest groups like the AARP oppose changes that will improve the financial viability of the Social Security System. 

If even the Swiss have no taste for even modest changes to their pension system, there’s little reason to expect that Washington politicians or the American electorate will back changes to Social Security or other entitlements absent an imminent financial collapse. 

Five Signs the Recession is Already Here

 

The American economy has been transformed over the last three years through centralized economic planning and big government spending.  Americans have less freedom to make economic choices today than any time in the past 25 years. 

The result.  Not prosperity.  Most Americans believe that the inflationary economic policies of the Biden Administration have been harmful to them.  Inflation has eaten away at their paychecks.  Now there’s increasing evidence that the U.S. economy is sliding into or already in a recession. 

Here are five signs that the American economy is already in a recession:

Falling Economic Indicators: The Conference Board’s leading economic indicators are deep in recession territory.  Consumers are struggling to pay bills.  Consumer confidence is down.  Even demand for cardboard boxes, which are used to ship most everything, is down. 

Rising Business Bankruptcies: S&P reports that the number of business bankruptcies in 2023 was 72 percent higher than 2022 and the highest in the last thirteen years.  2023 has been described as a mass extinction year for startup companies.  Pitchbook estimates that over 3,000 venture-backed startups failed in 2023.  2023 was a dismal year for companies going public.  Only 154 companies went public in 2023, half the annual rate of initial public offerings during the four years of the Trump Administration. 

Falling tax collections:  federal tax collections in 3Q 2023 are down 11 percent from 3Q 2022.  Tax collections are a good sign of the amount of private sector economic activity because the federal government takes a share of all private sector earnings and profits. 

Manufacturing Contracting: The Institute for Supply Management reports that the manufacturing sector has been contracting for the last 14 months.  S&P’s Chief Business Economist Chris Williamson says about manufacturing that “an increasing sense of gloom about the near-term outlook has meanwhile hit hiring and led to a further major pull-back in purchasing activity.”  So much for blue collar Joe.

Declines in Temporary Employment: Temporary employees are easier to lay off than permanent employees.  As a result, temporary employment falls more rapidly than permanent employment as the economy enters a recession.  According to the BLS, employment in temporary services has fallen for 15 straight months. 

Yayoo! Finance: Wealth Transfer to Gen Z and Millennials Overstated

Millennials and Gen Zs that feel they are falling behind likely won't get much help from inheritances from parents says wealth manager Cerulli Associates.  The reason is the high cost of health care and that relatively few aging Baby Boomers and Silents have a large amount of wealth to begin with.  

But the overwhelming cost of health care for older people means most people in those later generations won’t inherit much, even if their elders seem well-off today.

The bulk of the trillions will go from one group of already wealthy people to another. Cerulli estimated that 68% of the wealth transferred between 2020 and 2045 — which includes boomers as well as older generations — will come from U.S. households with at least $1 million in investable assets. And only 6.9% of households have that kind of wealth to begin with, Cerulli added.

As I have blogged before, Gen Z and Millennials are in a difficult positron in building wealth.  Higher interest rates look to be the norm going forward.  High interest rates don't benefit most young investors.  

Most young people are net debtors rather than net creditors.  That is, the amount that they owe is greater than the amount they have in investments including holdings in 401(k)s.  The result is that it takes even longer for young people to reach the point where they have positive net wealth other than home equity.

Prospects for Gen Z and Millennials realizing further gains in home appreciation also appear slim.  Home affordability is at a multi-decade low meaning it is going to be tougher to find buyers.  Plus, home price growth over the last year has just about kept up with inflation.  While the nominal value of homes may have increased, so have prices for everything else.  Thus in real terms, homes are just as expensive today as they were last year.  

Finally, Gen Z and the Millennials will at some point be bearing the bill for the large amount of public sector debt that has been issued over the past twenty five years.  Eventually taxes will have to be raised.  When Uncle Sam's take goes up, Millennials and Gen Zs will have less to put away for their own savings and might very well find themselves subject to higher taxes on wealth passed down from their parent's generation.  

Two in Three Young Americans Want Social Security Reform

 

Young Americans are more likely than Baby Boomers to want Social Security reformed according to a new survey by Redfield and Wilton Strategies.  According to Newsweek magazine:

“A majority of 63 percent of Americans ‘strongly agreed’ (28 percent) or ‘agreed’ (35 percent) that the Social Security system needs to be reformed, according to the Redfield & Wilton Strategies/Newsweek poll. Only 10 percent ‘strongly disagreed’ (5 percent) or ‘disagreed’ (another 5 percent).”

Support for reform was strongest among Millennials:

“According to the poll, 56 percent of Gen Zers, 76 percent of millennials and 69 percent of Gen Xers believed the system should be reformed, against 50 percent of boomers.”

Newsweek interviewed Richard Johnson, Head of the Urban Institute’s program on retirement security.  Johnson offering sobering comments for young Americans: "unless policymakers fix Social Security's finances in the next 10 years, millions of retirees and people with disabilities would plunge into poverty."

That’s bad news for young Americans. 

Will the Biden Administration and the Democrats fix Social Security?  That’s easy: NO.  In fact, their plans will make things worse.

For example, Senator Elizabeth Warren wants to increase benefits for Baby Boomers by $200 a month. 

Giveaways to current beneficiaries like Senator Warren’s will make the system even more unfair to Gen Z, Millennials and Gen X.

It’s far past time to exert real pressure on the Washington political class to end the fleecing of young Americans.  Real Social Security reform would be a good place to start. 

Africa Moves Ahead on Nuclear Power, The West Falls Further Behind

 

I consider myself an eco-modernist.  I understand the science behind climate change.  But I don’t think either panic or deindustrialization is necessary to address it.  Rather, I believe that technology can allow us to reduce carbon emissions and at the same time increase our material standard of living. 

The most promising alternative to fossil fuels is nuclear power.  Unfortunately, government regulation and environmentalist scaremongering has prevented the development of new commercial nuclear facilities in the United States and Europe for the last fifty years.

Fortunately, the rest of the world is not so backward looking.  Commercial nuclear development is taking off in Africa. 

African economies are growing rapidly and so is their demand for reliable electricity that can power industry and commercial activities.  Wind and solar can’t do that. 

Here’s a roundup of commercial nuclear development in North and East Africa. 

Egypt is building a mammoth 4,800 MW plant on the Mediterranean coast.  The El Dabaa plant is being financed with assistance from Russia. 

Four East African countries have announced plans to develop commercial scale nuclear power plants to support economic growth.

Uganda is leading the way.  Uganda is planning a 2000 MW nuclear power plant with the first 1000 MW of capacity to be brought online in 2031.

Rwanda signed an agreement with a German-Canadian company to develop a nuclear power test facility. 

Kenya plans to start construction on a 1000 MW commercial nuclear plan in 2027. 

Burinka Faso is working with Russian on the development of commercial nuclear. 

And Tanzania is looking into developing commercial nuclear facilities in conjunction with Russia. 

Meanwhile, Germany shut down its last three nuclear plants this year.  In their place, Germany has ramped up generation from carbon-emitting coal. 

Nuclear energy is yet another industry where the United States is far behind Russia and China.  None of the African projects are being developed by U.S. firms.  Commercial nuclear has become another industry of the future where the United States is not competitive.

Update: China brings the world's first Generation IV nuclear reactor online.

Young Voters Rally to Conservative Parties in the USA, Argentina and Canada

 

Young Americans are turning thumbs down to the statist policies of the Democrats.  Polls show Trump leading Biden among 18-35 year olds.  But it’s not just the USA.  Young people are rejecting socialism and the parties of the left throughout the world.

The most recent NBC poll shows Donald Trump beating Joe Biden by four points among 18 to 35 year olds.  Trump also has a four point margin over Biden among all voters.

This is a seismic shift in the views of young voters.  In the 2020 election, Biden had a 26 point lead among voters between the ages of 18 and 35 reports the Daily Mail 

But its not just the United States. 

Young people are rallying to candidates with a conservative and free market message throughout the world.

Young voters were the key to libertarian Javier Milei’s victory in the Argentine presidential election. 

Milei promised to stop inflation through a sound money policy; cut public spending by 15 percent; and stop rampant corruption.

Milei got 56 percent of the vote in the November 19 election.

In his victory speech, Milei said that his victory marks the beginning of the reconstruction of Argentina. 

“Today we retake the path that made this country great.  Today we embrace the ideas of libertarianism.  The model of decadence has come to an end.”

Argentina was once one of the richest countries in the world.  Today, more than half of all Argentines are poor or destitute.  Inflation is 143 percent a year.  The

And it doesn’t stop there.

North of the border, in Canada, Pierre Poilievre’s free market message is winning over young voters. 

Poilievre’s stock speeches address issues like inflation and loose monetary policy; Canada’s housing shortage, free speech and cutting Canada’s bloated and oppressive government bureaucracy.  He’s an eco-modernist backing technological solutions, not taxes, to the climate change question. 

And importantly, Poilievre’s upbeat and making it fun to be a conservative again. 

Young people throughout the world are rejecting socialism and the bureaucratic, high tax parties of the left.  This includes Joe Biden and the Democrats. 

Instead, young voters are putting their hopes in pro-freedom, pro-opportunity parties in much of the world.  This is good news for parties on the right.  Now these parties need to deliver.