Question

In: Economics

How did the “baby boomer effect” impacted market demand and market supply in your industry? And...

How did the “baby boomer effect” impacted market demand and market supply in your industry? And how

How did baby boomers impact asset prices in the past? Specifically, what do you think was the impact of “baby-boomers” on housing prices? What do you think was the impact on other investable assets like equities?

Solutions

Expert Solution

Baby Boomer was indeed a descriptive term which is used to refer the people who were born between 1946 and 1964 and they are now well known to push up rates of homeownership, consumer spending and, employment. Therefore, with this positive outlook, it can be concluded that the supply and demand in the industry increased in the industry.

Baby Boomers accelerated the rate of household formation in the early 1970's and with that the asset prices got to increase steadily on the whole and eventually it had become a lot higher than it was before.

Consider housing where the baby boomers resist selling houses, which helped to keep the inventory low and the prices a bit high on the whole. This is in contradictory to the 'empty nest syndrome' which made the housing prices to be high on the whole.

It is when the baby boomers get to retire, there would be a definite decrease in the equity allocation and the stock prices where all the other things are held constant.


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