HS Dent | How and When Does the Innovative Generation Impact the Economy

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Generation Wave

The Generation Wave tells us when, where and how an innovative generation will impact the economy.” - Harry S. Dent, Jr.

Every 80 years, an innovative generation is born that revolutionizes technology, introduces fresh social trends and builds entirely new industries from the ground up. The Generation Wave is a forecasting tool we use to gain a macro view of these innovators as they move through the stages of life. Why? This generation fundamentally and predictably impacts every aspect of the economy from inflation to housing starts to stock prices.

A Generation Wave begins with an identifiable surge in the birth index that announces a new generation of innovators. For example, our current Generation Wave the era of the baby boomers illustrated below began when the birth index peaked in the early 1950s. As this new generation ages, it moves through three distinct stages, the Innovation Wave, the Spending Wave, and the Power Wave.

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As this generation comes of age, we see an influx of radical new business practices, products, services and technology.

The Innovation Wave peaks when this generation enters the workforce, generally between the ages of 19 and 22. Its visionaries introduce business ideas that profoundly affect products, technologies, organizations,relationships and values. Their innovations also revitalize the mature, staid economy created by their elders. In the late 1800s, for example, the last generation of innovators invented electricity, telephones, automobiles, airplanes and aspirin,to name just a few key contributions. Today’s generation of innovators has, with the invention of the microprocessor, created a wholesale revolution in how and where we work, live and communicate.

The economy booms as this generation reaches its peak spending years.

The Spending Wave peaks when the innovative generation enters their forties. Its spending power drives new technologies, exclusive products,and specialized industries out of niche markets and into the mainstream. Goods and services that once only the affluent could afford are now within the average consumer’s reach. The result is a booming economy. Today, for example, everything from personal computers to cell phones to specialty coffee is available to most everyone.

As these visionaries age and become the new power elite, they greatly extend the impact of their innovations.

The Power Wave peaks when these innovators enter their 50s and 60s. As they assume positions of corporate power en masse, they stimulate a revolution in business practices that truly exploits the advantages of the new technologies. For example, what the assembly line production revolution was to the Henry Ford generation, the Internet marketing revolution is to the baby boom generation today.

The generation that follows has its innovators, but overall such individuals tend to improve and extend the revolutionary changes introduced by their predecessors. Under their guidance the economy matures and stabilizes, preparing the way for the next 80-year cycle.

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Generation Wave