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Wednesday, July 29, 2015

Headwaters of US Population Growth (Mexico) Going Dry!?!

There is a general consensus that the US population will continue to grow (unlike Germany or Japan or most advanced nations)...and the story goes that immigration (primarily of the Hispanic variety) will offset the US negative birth rates.  Let's think this one through using Mexico as the proxy.

The graph below shows Mexican total population over 5 decades (the rising blue line) but note the flattened grey line...Mexican 0-14yr/old population.  The astute observer will note the 0-14 yr/old Mexican population peaked in '05 and has fallen by over a million since or a decline in excess of 3%.  All this lines up with the 70% decline in Mexican birth rates over the same time.

And the chart below shows the annual change in Mexican population vs. the 0-14 yr/old annual change turning, the headwaters of Mexican and vis-à-vis US population growth are going dry.

A good question now would be "so what"?  US economic growth and it's ability to service debt (among other things) is largely dependent on a growing population.  However, it appears Catholics aren't the baby making machines demographers assumed (appears Catholics are people too?!?) and Mexico's young population is now shrinking.  Plus, America isn't creating an excess of low skill jobs to draw them.  So, fewer Mexicans chasing fewer US jobs all adds up to significantly slower US immigration and population growth than assumed...and significantly slower growth in consumption and general economic activity.  

I take no pleasure in wrecking this fairy tale but truth is what it is!

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