Along the lines of the demographic issues I've been thinking about recently, I wonder how we can make the appropriate adjustments to our standard measures of economic activity.
In 1995, 12.5% of the population was above 65 years old. In 2015, it will be up to 14.4%, and by 2035, it will be up to 20.7%. Compared to the boom times of the 1990's, an additional 8% of the population will be of retirement age. Whether we measure the effect of this change on the economy through consumption or production, there will be a tremendous drag on the standard measures of economic growth.
But, the point I would make is that this will be a purely statistical drag. For those 60 million retirees, this will be a perfectly predictable part of their life plan. They worked harder and saved when they were younger so that they could enjoy a long life of retirement. The coming reductions in GDP growth will be a reflection of success, a product of an incredible time in history where we can expect to spend much of our lives being economically unproductive.
It seems like there should be some adjustment for that, similar to an adjustment we would make for inflation: "Real GDP grew at a rate of 1.5% this quarter. Nominal GDP grew at 2.5%. And, lifecycle adjusted GDP grew at 3.5%."
I am afraid that we are looking at a 20 year period where there will be a constant clamoring for poor solutions to problems that only exist in the minds of lazy or opportunistic consumers of statistics.