“Smart investors take a broad view of the economic landscape to spot the major turning points that guide their decisions.” - Harry S. Dent, Jr.

The baby boom generation, like the Henry Ford generation, is comprised of innovators, entrepreneurs and visionaries. As it has reached its peak spending years, we profited handsomely from an economic boom that lasted until the housing and stock markets began to crack in 2007.

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“We’re now in the deflationary shake-out phase , which will be the worst for most investors”

The first season, Inflation and Innovation occurred roughly between 1968 and 1982. During this period, baby boomers entered the labor force and introduced revolutionary changes in technology, products, and business practices. These costly innovations were financed by scarce capital, which drove inflation rates to their highest levels in history.

The season that follows Inflation and Innovation is the Growth Boom, which divides into two distinct phases. The first phase of the Growth Boom occurred from 1982 through 1998. During this time, most baby boomers were buying their first homes to accommodate growing families. Debt levels and consumer spending rose while inflation rates fell. Many of the innovative products and technologies introduced in the previous period moved mainstream and the economy boomed.

The second phase of the Growth Boom continued until the end of 2007. What we saw between 1998 and 2007 were predictable traits of a booming economy. The introduction of radical new business models accelerated the movement of new technology into the mainstream, productivity was very strong, inflation settled into low, flat rates, and consumer debt levels began to fall.

The next season—where we find ourselves currently– is a Deflationary Shakeout or depression era.. In the last 80-year cycle, this occurred from 1930 to 1942. During this Deflationary Shakeout, we are seeing a disinvestment of production facilities and labor that were built up in the race for leadership during the Growth Boom. It is the worst time for employees and most investors, but the financially savvy can do very well.

The next season, the Maturity Boom, divides into two distinct phases. During phase one of the Maturity Boom, which will begin around 2023, the conformist generation that follows the baby boomers will enter their spending cycle. In the last 80-year cycle, phase one of the Maturity Boom occurred from 1942 to 1958. This season stimulates the economy and sees stable growth by the companies who survived the shakeout. The innovative industries of the previous generation extend into full mass-market saturation.

In phase two of the Maturity Boom, which will begin in the late 2030’s and last until the late 2040’s, the conformist generation will still be spending at or near their peak. A new generation of innovators will also begin to enter the labor force, leading us directly into the next season of Inflation and Innovation. The cycle is complete, and begins again.