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Dear R. Hunter,

Our director of research, Mark Zoff, has produced the attached special
report, "The Transformation of the US Labor Force and Its Implications
for Consumption", which details how the US labor force has evolved in
recent decades and analyzes how this has affected and could affect
income and consumption growth among different age cohorts. Some key
points:

US consumption growth could continue to be tepid if recent trends in
income growth, wage share of GDP, household debt, and productivity do
not reverse in the future

People under 45 years in age are increasingly constrained in their
ability to consume at rates seen in the past while increasingly affluent
older workers are not picking up the slack

The workforces in traditional white and blue collar sectors are growing
older more quickly than the national average while the retail and
hospitality workforces are more youthful

Only households headed by people 55 years or older have seen real gains
in their net worth in the previous two decades

Younger people are increasingly opting out of participating in the labor
force while older people are staying in the labor force

The implications of this research are negative for growth in the US
economy for some time to come barring an exogenous event, such as war or
another major asset bubble, that reverses these trends. Consumption has
been responsible for three-quarters of US GDP growth during the past two
decades, so any decline in consumption growth will have negative
ramifications for GDP growth. While many of the older workers currently
working in white and blue collar sectors will eventually retire, there
is a reasonable risk that these jobs may be replaced with automated
processes and machines instead of new workers.

As always, we welcome any questions or comments you may have.


With all best wishes,

David Hale

Chairman

David Hale Global Economics, Inc.

546 Lincoln Avenue, 2 nd Floor

Winnetka, Illinois 60093 USA

847-386-6009 (tel)

847-386-6011 (fax)

davidhale@davidhaleweb.com

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