Social Security might have a shot at surviving for another generation, and that’s thanks to 78.1 million individuals who will be contributing to it—the generation after millennials, those who were born after 1997 and make up what is known as Generation Z.
Morgan Stanley says it is more optimistic about the impact of Generation Z than the Congressional Budget Office. Its view of potential GDP by 2040 is above the CBO’s by 2.4% to 4.3%. Morgan Stanley says the CBO is understating potential labor force growth by between 0.2% to 0.3% per year in the 15 years through 2040. If it is right, the Social Security trust fund reserves may not become depleted until 2062. It likely will delay the date of depletion for Medicare funds as well, the report said.
The most obvious benefit, the firm says, is the tailwind to sales growth. “To the extent the rise of Gens Y and Z in the labor force support a higher potential GDP growth rate in the U.S., this relationship would indicate a modestly higher potential longer-run growth rate for corporate sales and earnings,” the report said.
You can find the full article at MarketWatch.