Entitlement costs killing the US economy

Yahoo: Baby boomers and millennials are capping growth in the world's biggest economy, Standard & Poor's (S&P) said on Wednesday.

Lengthening lifespans and low fertility rates have led to a steady decline in U.S. population growth over the past 20 years and the proportion of working-age Americans is shrinking, the ratings agency said in a report.

"The share of the population past prime income age is growing as baby boomers age, and the next large pool — the millennial generation (born largely between 1980 and 2000) — is still beginning careers," it said.

S&P said the changing age composition of the population would knock 0.8 percentage points off annual growth over the next eight years. Between 2004 and 2014, demographic changes cut growth by 0.6 percentage points per year, compared with the previous decade.

Add in the baby boom retirement from public sector and  the problem is much worse.  We are looking at a 1.3% GDP (2.1-.8) growth rate, but the transaction costs (ATM fees) of using the dollar is already about 1.5% and rising.  Firms planning to obtain 1.3% more growth will spend 1.5% adjusting their asset allocation.

Hence, the uncertainty of forward planning means we will be in and out of recession constantly, like Japan and Italy.