Baby boomers control economy, speaker says

An economist said he doesn't expect gas prices to stay down.
By JEANNE STARMACK
VINDICATOR STAFF WRITER
YOUNGSTOWN -- People born between 1946 and 1959 are driving the American economy, according to an Ohio State University professor.
Business owners in the "green industry" heard from him and other experts who told them what to expect from energy prices, consumer trends, the labor market and information technology trends.
The green industry includes landscapers, tree nurseries, lawn-care businesses, garden centers, florists and farm markets. Business owners gathered Tuesday at Davis Center at Fellows Riverside Gardens for a program presented by the Ohio State University Extension and the Mahoning Valley Landscape and Nursery Association.
Driving forces
Stan Ernst is an associate professor in marketing and consumer economics. The baby boom generation, he said, which is 30 percent of the population, is actually driving the economy.
"Boomers are in their peak earning and spending and savings years," he said. "The question is, will boomers turn into savers at retirement?"
Ernst said that by the year 2030, one in five people will be senior citizens. He said there will be 8 million households with incomes at $100,000 by 2010.
"The question is, where will it be spent?" Ernst said.
Boomers set the standard for Americans' view of age, and lifestyles are driven by those values, he said. The values are reflected in housing trends and "all kinds of purchase patterns," he said.
Ernst said the Hispanic population also bears watching for trends. It will grow by 1.2 million annually over the next 20 years.
"Income and wealth is increasing for nonwhites," he said. Homeownership will go up, and there will be greater investment in homes."
Ernst said policy pressures also affect the green industry.
Access to water, zoning and community design changes all have an effect.
He also said big-box stores such as Wal-Mart, Lowe's and Home Depot offer opportunities for competition. Small businesses can't compete on price, he said, but they can compete by offering more varieties of merchandise at a better quality.
Energy costs
Matt Roberts, an economist, talked about forces that are driving energy costs and what to expect for the future.
He said energy-price increases in recent history were driven by supply shocks, or decreases, but the current one is driven by demand. He said oil is being produced, but not fast enough to outpace demand.
China, with its explosive growth, is one big reason why, he said. It has become the world's second-largest oil importer behind the United States and is followed by India.
Roberts said the hurricanes had a short-term effect on gasoline prices, but the demand-driven market was in a state to encourage those high prices.
He also said prices have fallen in the months since the hurricanes because gasoline imports arrived to remove the pressure. But, he said, he doesn't expect them to stay down.
He said the same is true of natural gas, with winter approaching and the demand rising.
Stronger demand is driving the current surge in prices for crude and natural gas, and there is little relief in sight, he said.
He said there is no easy answer, because alternative fuels are expensive or not readily available.
"Businesses need to understand their energy needs," he said. "Does it make sense to pull back from activities that are more energy intensive, or raise prices?"
Dave Boulay, an assistant professor of commodities and energy, discussed trends in the labor market during the afternoon session of the seminar. His presentation included current issues, such as the lack of qualified workers, general trends and trends in employer responses such as outsourcing and temporary agencies.
Ernst also discussed the importance of an Internet presence and online sales.