Economic forecaster Harry Dent says demographic destiny will crunch the economy

Economic forecaster Harry Dent says macro-cycles for demography and commodities are bottoming out simultaneously, with a big downturn and property price crash the results.

Macro-cycles in demography and commodity prices are about to bottom out, and the result will be a global downturn that business can only survive by paring back overheads.

Harry Dent

That’s the grim vision of economic forecaster Harry Dent, who told My Business the cycle of commodity prices goes around every 30 years. The last dip was in 1980 and we’re due another, he said. Demography also has a cycle, he said, and the exit of many baby boomers from the workforce represents the bottom of that trend.

“We study demographic trends and the boomer generation have peaked in their spending and become a drag on the economy,” he said. “Boomers don’t want to spend – they don’t want bigger houses.” That means less demand from consumers and the result is what Dent calls a “winter season” in which growth is slow for a lengthy period.

Business, he feels, needs to batten down the hatches.

“The key strategy for businesses is to cut overheads and fixed costs. And only put money into stuff that generate business.”

That may sound glum, but Dent also sees upside because “Businesses that survive the winter season will see the competition go away. Those that survive lead for decades.”

Australian business, thanks to our Asian links, are well-placed to survive.

“Australia should weather this better than anyone – you are not as weak demographically because of strong immigration. But you have problems of over-reliance on China’s boom and expensive real estate.” The latter, he said, will fall by 50% in “the next few years,” but feels this is a good thing as it will make Australia more competitive. China, he added, will not grow strongly because an ageing population will retard development.

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