To understand why interest rates are not likely to rise for decades to come, why debt levels will follow Japan's lead, why the Fed and CB's worldwide will only buy more assets, and why neither Trump nor Hillary could ever come through on their economic fairytales...the following is critical.
Population growth is the primary factor in economic growth...it matters not if the population is 7 million or 7 billion. Even wage increases are of minimal impact as they are mostly consumed by inflationary price increases. What matters is the change in the size of that population. When the world whirred with growth, the population was growing rapidly. Particularly among younger and wealthier populations. Now the world and the US has lost the driver for increased consumption...a rising population where it counts among the younger population.
Below, the reversed make-up of population growth from the peak under Clinton to the upcoming bottom under President Trump (particularly in the second term). And all these numbers assume continued current levels of immigration...if that slows, these numbers will be even more skewed to the downside.
Since 1910, the annual number of births in the US has risen +42% while the total US population has risen +255%. However, annual births peaked in 1957 (& double peaked in '07) while the total population continues to grow.
Some may wonder why hasn't the growth in total population been met with likewise growth in the birth rate? The short answer is the child bearing population is the 15-40yr/old population which has barely grown since 1986 (nearly all population growth has been in the 40+yr/old population living far longer). Since the early '70's, fertility rates have remained negative.
Despite amazing stories of 60yr/old mothers or heart breaking tales of 9yr/old children having children, the 15-40yr/old population is responsible for over 97% of annual births in the US. The chart below shows the sharp growth in the child bearing population from '60 to '86 and subsequent relative plateau in that population since. The fertility rate is the red line (zero growth population is represented by the dashed 2.1 births per female line). Plainly, the US has been on the negative side of that 2.1 line since 1971 except for brief blip in '06 & '07 (2.11 & 2.12). Since '07, the fertility rate only continues to fall.
Below, annual births vs. the 15-40yr/old US population. The columns in gold represent the years of 4+ million births, blue columns below 4 million, the red line the 15-40yr/old population.
But since 1965, the US population (in total) grew from 194 million to 316 million (2013 data) or an increase of 122 million Americans. The population under 15yrs/old has only fractionally changed while the 15+yr/old population grew from 135 million to 255 million or an increase of 120 million. So, if one viewed the US population at it's headwaters of the under 15yr/old population, it's very clear America isn't growing...and if one views the US population from 15-->100yr/olds, it's only growing older...and the eventual looming rise in the death rate will unmask the lack of bottom up growth.
More on The Myth That America's Superior Demographics Can Save It HERE.
So why does the US Census continually hold onto fertility "green shoots" expecting fertility rates to turn up into positive territory? It sure can't be based on any of America's developed world cohorts. Below you can see the US fertility rate is among the highest in developed nations.
The chart below is a close up of the above, since 2000. Based on incoming data there is no reason to believe rates will rise and good reason to believe they will continue falling.
As for those "South of the border", aka the cradle of positive US demographics and immigration...the chart below shows the collapse in fertility rates from 1960-->2014 for Mexico and Latin America as a whole. As of 2015 forward, both are likely officially negative.
More info on what is actually happening regarding the collapsing flow of illegal immigrants into the US...HERE. Or why the same issues raised in this post for the US are even more severe globally...HERE.
As for the US Census estimates, below in black is the actual 0-4yr/old US population. The orange line was the 2008 Census estimate through 2050. The red line represents the most recent 2014 estimate. Not even close but luckily it's only the OMB, CBO, etc. that make their budgets based on the Census guesstimates!?!
Below, what the Census Bureau's '16 revision should look like based on all incoming data. And this massive downgrade to population growth absolutely sends a tsunami across present and future demand.
Below, the 15-40yr/old population '08 and '14 estimates. The revised '16 estimate is likely to be close to flat-lining.
Where will all the population growth take place? Old living far longer. By 2050, 40-59yr/old population will grow by 11 million and 60+yr/olds will grow by 41 million.
And finally below, how population growth (or lack thereof) ties in with interest rate cuts and resulting debt encouraged by the Fed's rate cuts. It is the lack of growth in the population combined with negative demographics that will continually drive demand down...and this is why rates are not likely to rise in our lifetimes while debt levels move to ludicrous levels.
Conclusion - Those telling you America and it's "positive demographics" will outgrow America's debt and decay are dead wrong. Only with honest information can we even consider having an informed discussion. Whether a democracy can handle the truth of a no growth or shrinking pie of consumers, tax payers, and government giveaways is another question? Regardless, the only chance for Donald Trump to be of any use as the president is to do what he does best, lead America through a re-organization (aka, a bankruptcy) and help reset and re-engineer the nation for a brighter future. But far more likely, Trump really doesn't get it. He'll lower taxes, raise federal spending, and hit the gas toward the brick wall directly ahead.