This was an exciting week for the show, as it was our first show in the new 11:00 AM to 1:00 PM timeslot. It’s a blessing to not only spend an extra hour with my listeners but also reach an entirely new audience in this timeslot. It’s also providing practice in hosting a longer-format show, which will be invaluable when the show moves to a live call-in format in May, which is something I and my production staff are incredibly excited about.

So although we’re looking forward, and I was tempted to just hit the ground running by picking up this week where the 8:00 AM show left off last week, I figured our new listeners would benefit if I instead spent this show trying to condense the threads and themes of all past shows into one comprehensive narrative. This week’s show, then, is essentially The Jay Garvens Show’s manifesto. It blends twenty years of studying mortgages, real estate, economics, and demographics into one worldview. Ideally, what you learn in this week’s show—even if you’re a brand new listener—will inform anything you might hear on future shows.

The keystone of my economic worldview—the sole factor on which all other factors rest—is demographics, which are the observable, quantifiable data of populations. And within the field of demography, this show is concerned principally with age, with generations. Although there are about eight to nine generations in existence in America, I focus mostly on just three: the Baby Boomers, born between 1942-1960 and numbering roughly 60 million; Generation X, born between 1961-1980 and numbering about 40 million; and the Millennials, born between 1980-2000 and numbering around 80 million.

The Boomers and Generation X have determined where we are as a country today, and Generation X and the Millennials will decide where we go in the short- to mid-term future. Each generation is defined not only by its years but also its size, values, culture, etc. Each generation is unique, and all generations coexist in ever-changing combinations of maturity. Our economic prosperity, in fact, is tied to the dominant generation’s maturity.

Going back to Economics 101, the most basic model of an economy is based on supply and demand. Supply and demand are determined by the producers and consumers available within that economy. This means not only the numbers of producers and consumers but also the quality. Quality, for our purposes, mostly means the age composition of the producers and consumers. You see, within a worker’s lifetime, he will go through stages. He will gain education and experience throughout his twenties; he will settle into a career, begin specializing in his field, and start a family throughout his thirties; and he will be at his most productive throughout his forties and fifties up through retirement in his mid-sixties.

The productive capacity of an economy is determined mostly by the number of people in that 40s through 60s demographic. This explains the massive economic expansion of the 1980s through 2000s, during which the first boomers reached their 40s and, by the end, the last boomers reached retirement. The economic downturn since 2006 is the result of there being far too few members of Generation X to replace the productive and consuming capacities of the Boomers. Everything from homes and durable goods to clothes and appliances are seeing depressed demand since there simply are not enough consumers in the relevant categories to promote growth.

This is why I believe our economy won’t pick up until 2020, when the first Millennials reach career maturity. And not only will the economy pick up, it will positively flourish. The Millennials are nearly twice the size of Generation X and will both produce and consume at and above levels unseen since the Boomers reached maturity. This will have profound consequences for all sectors of the economy, from automotive to real estate to health care.

This, in essence, is how I believe economies function. Demographics determine supply and demand which determine the health of the economy. And, ultimately, the true health of an economy is reflected in the real estate and mortgage markets. Ignoring the noise from so much market data hitting us all the time, the housing market reflects the true nature of the economy. If employment is truly up; if wages are truly rising; if savings are truly accruing; and if people truly feel secure in their financial fortunes, they will start families, buy homes, and furnish them with things.

1-18-14 Demographics: A Look Back in Time and Supply and Demand Periods

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