Recently, market veteran Ed Yardeni said that the US recession theory is very wrong. Foreign media writer Filip De Mott interprets Yardeni's opinion and points out that the baby boomers' savings treasury saved the US economy from falling into recession. Here's Filip De Mott's opinion.

Yardeni analyzes why he believes the predictors of the end of the recession have gone astray. One of his main reasons is that this generation's consumption is on the rise, especially during the transition to retirement, where their consumption levels have increased.

“Most importantly, baby boomers had a record net worth of $76 trillion when they started retiring,” he said. They are spending more on restaurants, cruises, travel, and healthcare. All of these service industries are expanding the number of people employed, thereby increasing real income and further driving more consumption.”

This refutes pessimistic expectations of an impending consumer slowdown, which is the logical basis for believing that the economy will eventually collapse.

In contrast, Yardeni said that only the commodities sector showed signs of declining growth. But after a shopping boom that was difficult to overcome during the lockdown, inflation-adjusted spending on goods remains at record high levels.

This is a new perspective for baby boomers, as retirees are often seen as a source of financial burden for young people. By 2027, 4.1 million new retirees will be added each year, which some fear will put pressure on everything from the stock market to the labor market.

However, according to Yardeni, they are the reason why there has been no consumer decline in the past two years. He wrote a separate article in April stating:

“Baby boomers watched a lot of Star Trek in the 1960s. They certainly have Spock's motto 'Live Forever, Prosper, Thrive' in their hearts. He should have added, 'Then retire and spend all of his money before the end of his life'.”

The consumption of retirees is just one of the many reasons Yardeni points out against the US recession. In his view, analysts were right to initially anticipate a recession because of the Federal Reserve's aggressive rate hike cycle and flickering recession indicators. But the problems commonly associated with tight monetary policies, such as credit crunch and speculative bubbles, have largely been overcome. Although there was a banking crisis last year, the Federal Reserve's emergency response was sufficient to eliminate the credit consequences.

More importantly, higher interest rates actually make consumers more resilient, as households reap greater returns on bank deposits and money market funds.

At the same time, baby boomers' focus on service consumption may also distort metrics, making the situation seem worse than it actually is. “What about the Leading Economic Indicators Index?” Yardeni said, “It doesn't work very well because it heavily favors a relatively weak commodity economy and doesn't give sufficient weight to the strong service sector.”