The “New Normal”

This morning I don’t have much to say because I am exhausted after a very late night.  My husband and I attended an evening lecture at the Minnesota School Board Association gathering in Minneapolis,  Minnesota.  He is the chairman of our local school board.  He and I have different ideas about what actually qualifies as a “date night”.   

The two-hour lecture we attended was titled “Minnesota and The New Normal”.  It was a joint presentation by the state demographer, Tom Gillaspy and state economist, Tom Stinson.  I’m neither a demographer or an economist but I know that both have changed dramatically in Minnesota in the past ten years.  We attended a similar lecture about 5 years ago and much of what they had to say then describes where we are now.

The two Tom’s showered us with 13 pages of power point slides of forecasts, outlooks, demographics, population growth rates, total US wages, world labor force growth and so much more.  Then they went on to interpret where they thought we are headed.  Their predictions included the following:

The “New Normal” Probably Means:

• higher interest rates
• slower economic growth
• increasing numbers of retirees
• less consumption; more saving
• a more diverse population
• more uncertainty about the future

One of the interesting points that they made was “At what point in time did we know that we would have an aging population?”  We all know how to do math.  Just take the birth dates of the largest birth years and add 62 or 65 years to it and you know when you will have large older population and retirees.  What have we done to prepare for this change in our demographics as a nation?  Not much.  We haven’t cut back our spending in anticipation of less revenues coming in due to fewer workers.  Couple this with more families having fewer children and you wonder who will be doing the work in our nation.

They pointed out that this is not just a Minnesota problem or US problem.  The world labor force is changing as well.  Countries all over the world are expected to have declining numbers of working age populations.  This is good for the person looking for a job because if they have chosen the right profession, their  services will be in great demand, however instead of the ratio of 5:1 workers supporting retirees the ratio will be only 3 workers to every retiree and there will be an increased demand for their care.   In 2008 Minnesota saw a jump of 30 percent of workers turning 62. 

I haven’t decided if the lecture was supposed to be just informative or a pep talk of sorts yet.  They did talk about people will go through the five steps of grieving for the “Old Normal”:  Denial, Anger, Bargaining, Depression, and Acceptance.  They talked about not fearing the “New Normal”  because it plays to Minnesota’s strengths: productivity and education.

They cited 6 R’s of Opportunity

• restructure government costs
• replace retiring government workers wisely
• re-engage the growing retiree population
• restructure government revenues
• research to solve problems-ie improved graduation rates
• restore entrepreneurship, initiative, invention in the private and public sectors

They talked about a lot of things last evening but I still don’t think they truly addressed how we will handle the increase in the aging population and the declining revenue stream because of it but they did let us know it’s here.  I always get a little nervous when they talk about restructuring government spending and revenues because usually there is some “creative accounting” in the mix.

They ended with two quotes last evening:

The first was from Herbert Stein, Chair President Nixon’s Council of Economic Advisors

 “If something can’t go on forever, it will stop.”

The second quote was from Wayne Gretzky, Famous Canadian Philosopher, when asked how it was that he managed to be so successful in playing hockey. 

 “I skate to where the puck will be, not to where it has been.”

Okay, so I lied when I said I didn’t have much to say this morning.  Really, they are not my words but I’m just parroting what I heard last evening and trying to digest it all and what it means for us.