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Today’s Future Dictates Tomorrow’s Investments
Dr. Lowell Catlett
The  United States is becoming an affluent and an aging society that will experience a shortage of skilled labor within the next few years, according to professor and futurist Lowell Catlett. He discussed several economic trends that offer opportunities for savvy investors who can see past the current economic difficulties.
Catlett noted that despite 9-11 and the recession, the gross domestic product rose 2.6% in 2002 and 3.4% in 2003. He expects the trend to continue through 2004. “It happens no matter who is president,” Catlett stressed. “It’s not a political issue—it’s what happens when you let people loose to do what they do best.”
With the continuing loss of manufacturing jobs to other countries, Catlett observed that the U.S. has been moving for the past decade from a production society to a consumer society. And as our population ages, “they require more services—from oil changes to restaurants.”
As one example of changing spending patterns, Catlett noted that in 1989 we spent $82 million on lettuce; in 2003, that figure rose to $2 billion. “We didn’t increase our consumption,” Catlett said, “and the head of lettuce costs essentially the same—80 cents. The difference is that most Americans now buy bagged salad at a cost of $3 a bag.”
Although Americans are living longer, they are spending more money to look and feel younger. Catlett discussed a number of investment opportunities that take advantage of the trends, such as cosmetics. “Ten years ago for every dollar men spent on cosmetics, women spent 10,” he reported. “Today, for every dollar men spend on cosmetics, women spend four—and women have not reduced the amount of money they spend on cosmetics.”
Americans are spending money on higher-quality goods, according to Catlett. The buying habits of older, wealthier consumers will drive the economy in the next decade, he suggested: “The quality bar goes up for an aging, growing population.”
Changes in the economy and the workforce will require employers to reconsider their compensation plans if they are to thrive despite a coming labor shortage. “Companies that treat their employees like sterling silver are the ones to invest in,” Catlett said.
The labor pool of the future will include two important categories: immigrants and retiring baby boomers. Typically half of all immigrants buy a home within five years of arriving in this country. The possibility of home ownership is one reason why immigrants come here, Catlett noted. So if employers design fringe benefits that enable workers to buy a home quickly, they will even be willing to give up salary. Flexible work rules will help attract retiring baby boomers, many of whom, though retired, will pursue part-time work.
Catlett also reviewed how technology will continue to have a tremendous influence in the workplace. The use of radio frequency identification (RFID) chips, which can dramatically cut manufacturing and warehousing costs, will increase as the costs of producing the chips decreases. Three years ago RFID chips cost about $1 each to produce; today the cost is down to seven cents.
The largest purchasers of merchandise and materials in the private sector and the government are adopting this technology. Wall-Mart will require all of its suppliers by 2005 to deliver merchandise with RFID chips. The Defense Department has told its 44,000 suppliers that soon it will only buy from vendors that use RFID.
Manufacturers and retailers also see great potential savings because of RFID technology. John Deer’s smart parts division puts RFID chips on belts and pulleys that, when close to breaking, order their own replacements—without any inspection by an employee. And retailers could see shoplifting eliminated by RFID chips, which could identify anyone leaving the store with an item they have not paid for.
Our increasing affluence and affection for technology also creates investment opportunities. Catlett reported that Americans in 2003 spent $3.1 billion downloading ringers for cell phones, “because they didn’t like the 20 that came with the cell phone.”
Dr. Catlett is a regent’s professor at New Mexico State University. He is an agricultural economist by trade, but is best described as a futurist with an impressive knowledge of technologies and their implications on the way we will live and work.
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