4. Core inflation isn't an accurate measure because it leaves out food and energy prices.
The government says inflation remains low, yet we often see our grocery and gasoline bills rising. Because the government's "core inflation" measure leaves aside food and energy prices (reason: they are volatile), critics consider the core inflation rate a bogus indicator.
But food and energy together make up just 13% of total personal expenditures, trailing housing/utilities and health care, and so not counting those outlays may still result in a relatively accurate assessment of where consumer prices are headed. Also, housing/utilities and health-care costs have increased far more than food and energy costs since 1980.
5. Productivity is on a long downward slide because of the aging of the U.S. workforce.
The oldest baby boomers hit retirement age in 2011, and millions of workers will leave the work force during the coming years. But there is an even larger group right behind the boomers that will more than replace them. People born between 1977 and 2008, known as "echo boomers," account for 125 million Americans and outnumber the 117 million baby boomers.
As a result, the BLS estimates the nation's gross domestic product should grow 3% a year during the next decade. GDP drives corporate earnings, which in turn drive the stock market.Demographic trends also favor the U.S. on the global stage. The only country expected to see higher growth rates in the population aged 15 to 64 between now and 2050 is India, according to United Nations projections. 6. Social Security will bankrupt the nation as the baby boomers age.
The specter of bankruptcy hovering over the nation's Social Security system is exaggerated, according to Congressional Budget Office projections. The CBO forecasts that Social Security spending will actually decrease as a percentage of GDP during the next seven decades, because the "echo boomers" will be paying into the system. The real threats lie in rising costs for Medicare and Medicaid and a coming explosion in the cost of paying interest on the federal deficit, according to CBO projections. So the next time you hear a piece of received wisdom concerning the economy, stop and think twice. --By Ron Howard, managing principal at Siena Wealth Management in San Jose, Calif., for