Baby Boomer Age Wave Theory

DEFINITION of 'Baby Boomer Age Wave Theory '

An economic theory popularized by economist and writer Harry Dent, who concludes that the U.S. and other European markets will peak between 2008 and 2012. This is based on Dent's finding that a human's consumer spending habits peak by age 50; therefore, as the baby boomer generation reaches this age, the economy may be approaching a peak in consumer spending and in the markets.

BREAKING DOWN 'Baby Boomer Age Wave Theory '

Because American soldiers returned from WWII earlier than European soldiers, the theory concludes that markets in the U.S. will peak around 2008, while European markets will peak around 2012.

Assuming that the theory's predictions are accurate, some expect this to have wide-ranging implications. In addition, when baby boomers retire, this could cause spikes in unemployment and decreases in the housing market as aging baby boomers spend less. Others believe that the influx of immigration will help stave off these effects in the United States.