Why are Inflation, Unemployment, Interest Rates and GDP Growth Rates So Low? Japanification!

A quick look at The Economist or any authoritative source will reveal a little known reality:

Regardless of policy, politics or ideology, inflation, unemployment and GDP growth rates are historically and universally LOW!

Is this true? And, how can this be? From the most recent economic data section (as of this post) from 2/2/2020's Economist: 

GDP is 2.1% in the US, 0.5% in Germany, and 1.3% in Norway.
Inflation is 2.3% in the US, 1.3% in the Euro area and 1.9% in Peru.
Unemployment is 3.5% in the US, 3.1% in Germany and 3.1.% in Mexico!

Not every number but MOST of these numbers are quite low. The US, Germany, Norway, Peru and Mexico all have quite different politics but not so different results. Unemployment, especially, is low in the developed countries from South Korea to Denmark to the Czech Republic! What in the world is going on?

The answer may be found in Japan! Japan has the one of the lowest economic rates in the world and has had them for nearly two decades. Waves of Japanification-the demographics of aging societies-are sweeping across the developed world. As billions of people retire or retreat from active employment, they are being replaced by fewer and fewer young people-the result from years of low birthrates.

The new economies do not have the population growth, the economic growth or the financial growth of the post-war generations. Even the "robust" innovators, the DISRUPTORS-they only REPLACE existing structures rather than add to the national product. Amazon grows while brick and mortar shrink. Fewer Teslas replace many conventional vehicles. This negative pressure, pushing harder every year, will depress economies until the great generational transition plays out. Its taken a toll on Japan for two generations, since the 1980s, and still isn't done. It may take decades to play out in the West.

So beware those who tout their policies for today's unique low unemployment, low inflation and low interest rates. We may have decades to go before the developed world returns to the glory days of the latter 20th Century!

Feel free to post comments.

Disclaimer: Posts are for education only and not investment advice, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors.