“Sometime around the year 2005, perhaps a few years before or after, America will enter the Fourth Turning…A spark will ignite a new mood…it will catalyze a Crisis. In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or…a global terrorist group blow(ing) up an aircraft…” Strauss and Howe, 1997, The Fourth Turning: An American Prophecy - What the Cycles of History Tell Us About America's Next Rendezvous with Destiny
Financial Sense recently caught up with Neil Howe, best-selling author, speaker, and the leading authority on generational cycles in America, to get an update on his famous book, The Fourth Turning, and his prediction that America has now entered a difficult period of time still to last for another decade.
To understand how he came to this conclusion and why, Howe discusses an exhaustive multi-year study he undertook for his book Generations (along with co-author William Strauss), which was released in 1992. The end result of that effort told the story of the history of America dating from the 17th century to the present.
Howe was surprised to learn that there is a pattern in which these different types of generations occur – that a certain type generally follows another type. "One generation comes of age in a war and the next generation are the children of that war. By the time they’re leaders and parents they take completely different lessons of life. By the time of their elderhood, they look back on their life very differently," Howe said.
Howe mentioned that these different life lessons learned by one generation tend to be overcorrected by the generation that follows. Taking these and other related observations into account, Howe and Strauss wrote The Fourth Turning in 1997, which looks at various patterns of history and how those patterns can be explained by generational change. "The idea is that mirroring these different types of generations are four basic social moods," Howe said. These social moods are what Howe and Strauss refer to as turnings, with each turning lasting about the length of a generation or a little over twenty years.
The first of these turnings is referred to as the high or post-crisis era, which is synonymous with social solidarity, progress, and great trust in the major societal institutions of the time. The second turning is known as the awakening, a period in which people want to distance themselves from various forms of social obligation. Howe stated that America most recently experienced this turning between the mid-1960s and the early 1980s when the boomer generation began to reach adulthood, ushering in a new era of increased independence and societal revolts. The third turning, said Howe, is the unraveling period, where individualism and cynicism reach a peak. The fourth and final turning, said Howe, is known as the crisis period, and is an era in which major institutions are effectively torn down so that new ones may be ushered in during the subsequent post-crisis era.
As predicted in 1997, Howe believes that America entered this final turning period around 2005 with the Great Financial Crisis of 2008 serving as the major defining event of this transition. Given that each period tends to last around 20 years, Howe believes America will face a number of significant upheavals into the late 2020s.
"We’re kind of eight years into it, so we have a long ways to go. This is not just a single event. This is an era. It will be filled with blows and hits and ultimately what we come out of the fourth turning with is institutions which, to some extent, have been torn down and rebuilt, and we’ve obviously not done that yet, which persuades me to believe that there will be other blows to come during this era."
When asked about present day demographics, Howe stated that since the boomers are such a large generation, a doubling of the number of Americans over the age of 65 could occur between 2010 and 2050. Contrasting this with only a ten percent predicted growth rate in the number of working age Americans, Howe noted how this will undoubtedly lead to significant economic stress. Referring to Generation X, Howe stated that this generation has been hit the worst, since they were the most adversely affected by the decline in housing prices and the accompanying economic downturn that began in 2008.
Howe also notes how these patterns repeat themselves over time by pointing to a number of important parallels between the current fourth turning and the prior one of the 1930s: widespread fear of deflation; declining birth rates; rise in multi-generational homes as parents, children, and grandchildren all live under the same roof; and even a reduction in crime rates. We should also mention that the Great Crash of 1929, which marks the beginning of the prior fourth turning, took place nearly 80 years before the Great Financial Crisis of 2008, in agreement with his observation that each turning lasts roughly 20 years with a full cycle completed in 80.
At the end of the interview, Howe discussed the major generational archetypes he's identified (artist, prophet, nomad, and hero) and how they correspond with the predominant psychology of each era or turning period.
For more insights on Howe's fascinating work, Financial Sense highly recommends our listeners to read The Fourth Turning or visit his site, Saeculum Research, for more info.
To hear this full 2-part interview with Neil Howe, please make sure you are logged in and click here for part 1 or here for part 2. For a complete archive of our broadcasts and podcast interviews on finance, economics, and the market, visit our Newshour page here or iTunes page here. Become a subscriber to our weekly premium podcast by clicking here.
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