In other words, the equity risk premium went up.2 Similarly, in corporate bond markets, future default rates expected by analysts hardly moved over this period. And yet spreads widened sharply, reflecting an increase in credit risk premia. While early 2019 has seen a partial retracement of these moves, both equity and credit risk premia remain higher than a year ago.
Indeed, the fact that we have smaller cohorts means that we must do better - we can’t afford to squander the potential of these young people. Once they have finished high school, they need to learn the skills that will help them to become productive workers in the expanding sectors of the economy.