Tuesday, July 30, 2019

Why The Fed Is Compelled To Cut Rates. Housing, Housing, Housing

The Annual Growth Of Potential Home Buyers Is Decelerating To Near Zero And Will Remain There For The Next Decade.
The Annual Growth of Potential Sellers is Surging and Will Continue To Do So Over The Next Decade.
A Surplus of Homes Are Being Built Versus The Minimal Growth In Buyers.
The Fed Will Cut Rates In Pursuit Of Prolonging The Housing Bubble.
US Births, Fertility - 1950 to Present
From 2008 through 2018, there were 4.4 million fewer births in the US than the US Census estimated there would be in its 2008 projection.  2018 US births were over 500 thousand fewer than those seen in 2007.  The sharp and ongoing 12% decline in births since 2007 is entirely contrary to the sharp increases in asset prices and economic activity...and the Census and Federal Reserve expectations.  The chart below details annual births (blue columns) and the fertility rate (black line).  During each previous economic upturn and financial bubble, the gains were widespread enough to incent a higher fertility rate and higher quantity of births...until the opposite result has been observed for over a decade in the current cycle.  Whatever policies are in place are not translating to economic and financial well being among the child bearing population...and fertility and births reflect this.
Below, births (blue columns) versus the population segments.  The dark blue line representing the 0-14yr/old population versus the 45+yr/old population (red line) is so telling.  Since 1962, the 0-14yr/old population is essentially unchanged while the 45+yr/old population has more than doubled...rising by +76 million.  Meanwhile, the minor increases in the 15-45yr/old childbearing population (yellow line) continue to be overridden by falling fertility rates.  Thus a childbearing population that is nearly double the size it was in 1957 is having 12% fewer total births...and births continue falling fast.
Ok, you get the idea.  Total births in 2018 were 12% below the 2007 and 1957 double birth peaks and 17% below what was projected by the Census just a decade earlier.  The vast majority of population growth is now among the 65+ year old population...in particular, the fastest growing segment by percentage and also in total numbers is the 75+ year olds.
Home Buying Population, Housing Permits, Interest/Mortgage Rates
So, what does this mean for housing?  On a net basis, nearly all housing is purchased by the 20 to 64yr/old population segment...so, the chart below shows their annual change (blue columns), housing permits (black columns), Federal Funds rate (yellow dashed line), and the 30 year mortgage (red dashed line).  The 20 to 64yr/old population saw twin annual growth peaks in 1981 and 1998, adding in excess of 2.2 and 2.4 million during those two years.  As for housing permits, they vacillated from 1 to 2.2 million annually from 1965 to 2005.  But the core population and housing permits essentially haphazardly mirrored one another from '65 through '05.  However, since '05 permits tanked unlike anything seen since 1950 while growth among potential buyers has fallen to levels unseen since prior to 1950.  Of course, the adoption of ZIRP by the Fed and record low 30 year mortgages have spurred home builders...in conjunction with investors looking for a cash flow vehicle and foreigners looking for a safe place to park excess cash.  However, now all three sources of buying have their own problems...population growth among buyers is falling away, foreigners have been spooked by currency and administration actions, and investors facing rent-to-property valuation ceilings.
And everything, save for one, is about to get worse aside from the Federal Funds rate (and resultant mortgage rates) going down.  While valuations are through the roof, annual growth of potential buyers is a fraction of that seen in '98 or '05, foreigners have net ceased their purchasing partly due to relative dollar strength, and whether foreign or domestic, investing at these valuations with flattening rents simply no longer pencils.
As the blue columns in the chart above from 2019 through 2030 show, the annual growth of buyers will be at a level unseen since before WWII.  By 2021, 20 to 64 year old growth is projected to be just 200 thousand annually (and this is entirely dependent on immigration, otherwise declines will rule).  On a monthly basis, this means less than 20 thousand new potential employees, less than 20 thousand new potential homebuyers, car buyers, etc. per month.  So, the next decade is one of essentially little to no growth among buyers (blue columns below) while potential sellers (65+ year olds, red columns) surge.  The case for full employment and minimal further working age population growth (and thus, minimal further jobs growth) is made HERE.
Anyone unsure of the Fed's motives in cutting interest rates need only look at the primary pillar of the US economy, the housing market, the decline of potential buyers versus surge in sellers.  The only remaining tool the Fed has is ZIRP and more likely NIRP to hammer mortgage rates to new record lows in an attempt to continue blowing the housing bubble and save the banks from their fate, otherwise.
Birth data is via the CDC, population data via the UN report, World Population Prospects 2019.

Friday, July 26, 2019

Soaring Debt Vs. Shrinking Populations Of Young To Repay Or Service That Debt

Global debt is currently at $246.5 trillion and primarily in the Wealthier, Consumer Nations of the world.
The population of young in Consumer Nations has fallen 12% or over 100 million Since Peaking in 1975.
Debt on a per capita basis gauged against the consumer nations young is going parabolic.
For nearly a half century wealthy nations young populations have been declining versus rising young among poor nations...offset by secularly declining interest rates and the addition of over $240 trillion in global debt to maintain unnaturally high rates of economic growth.  The consumer nations population of relatively wealthy young has been declining for nearly 4 and a half decades, falling over 100 million or 12% during that span.  The population of relatively poorer nations young has increased by nearly 190% or increased by 570 million.  On average, each wealthier nations young person represents $26.5k in per capita consumption versus each poor nations young represents $1.5k in per capita consumption.  Said otherwise, it takes 15 more poor nations inhabitants to replace the loss of every one wealthier nations inhabitant to simply maintain flat consumption, thus the impetus for interest rate cuts and massive increases in debt among the wealthy.  Obviously, consumption hasn't been flat but has grown tremendously, primarily thanks to interest rate cuts, cheap debt, and only in a very small part from growth in consumption among the poorer nations population gains.

As I started in my last article, the world is characterized by stark inequalities among the global nations of "haves" and "have-nots". The World Bank is kind enough to categorize the world's nations into four buckets by the Atlas Gross National Income per capita (geographically detailed HERE and listed HERE). High income nations range from $84k to $12k per capita, Upper Middle income nations $12k-$4k per capita, Lower Middle income nations $4k to $1k, and Low income nations less than $1k per capita. To simplify what is taking place, I sweep the high and upper middle income nations 0-15yr/old populations together (blue line below), as these nations represent 90% of the global income, savings, and access to credit. They consume 90% of the global energy and purchase 90% of the global exports. They drive global economic activity. Likewise, I sweep the have-nots 0-15yr/old populations together (tan line, below).  To view the full picture, I include global debt (red line) and the Federal Funds rate (black dashed line).
Looking at the same chart but running through 2050, with UN population projections and debt estimated to continue growing at the same pace it has since 1950 (these #'s are inclusive of the impact of immigration and emigration).  Continued declines among the wealthy young consumers, growth among poor young non-consumers, and debt running from the current $250 trillion up to $2.6 quadrillion.  NIRP (negative interest rate policy) will be necessary to enable this sort of wildly irresponsible debt load.
And looking at the debt on a per capita basis of young in the consumer nations, the chart below shows the impressive rise of debt against a long decline in consumer nations young.  As of 2019, the per capita debt is over $334k per youngster.  But that is nothing compared to what is coming...
The chart below takes the UN population projection and estimated global debt through 2050, and drum roll please, by 2050 every consumer nation under 15 year old will be responsible for over $4 million in per capita debt.  That is the magic of surging debt and declining population...and that is entirely unworkable.  There is no possible way to repay or even service this sort of debt load in any free-market based fashion.
And just to round things out, the chart below shows annual changes in the populations of wealthier versus poorer nations under 15 year olds.  Also included is the rising debt, for some perspective on the role of debt in maintaining the growth of consumption.
Ok, to really round out the picture, here is the flip side of the equation...the 65+ year old populations of the same groupings of nations.
And annual changes in the populations...note the sharp acceleration in annual growth of consumer nations elderly since 2007 and the massive increases still to come.  This isn't even mentioning the unfunded pensions and liabilities due to these elderly.
And putting the changing population growth in perspective, the same groupings below but showing only the 0-65 year old annual changes among the wealthier and poorer nations alongside the Federal Funds rate (yellow line).  Note the deceleration of wealthier under 65 year old population growth from 2007 to now, and by 2023 turning to secular outright depopulation of consumer nations under 65 year olds throughout the remainder of the century.
Again, the growth in potential consumption among the far poorer populations in no way offsets the declining potential of consumption among the declining wealthier populations...without ZIRP (or more likely NIRP) and debt of gargantuan proportions.

Monday, July 22, 2019

How This Plays Out?!? Deceleration, Interest Rate & Asset Price Distortion, Debt, Deflation, Depopulation, Depression, Default

Some folks have asked how the current population and demographic scenario plays out and the impacts on economics, financials, politics, and the environment.  To give my best two cents, I offer the concept of stock versus flow.  The world is all about growth; month over month, quarter over quarter, and year over year growth. Not stock but flow.  In a world of 7.8 billion persons, from a growth perspective all that matters is the year over year growth of the population, the economy, financial assets.  Obviously, I'm going to focus on the nexus...population growth according to the UN World Population Prospects, 2019 (linked HERE).

From 1950 to 1988, total year over year global population growth accelerated from +48 million/yr up to +93 million/yr (chart below).  But since 1988, total year over year global population growth has been decelerating, now growing "only" +81 million annually in 2019, or 12 million fewer than the peak in 1988. By 2050, the UN estimates that total year over year growth will be somewhere between +48 million/yr (medium variant) to just +10 million/yr (low variant).

But the world is characterized by stark inequalities among the "haves" and "have-nots".  The World Bank is kind enough to categorize the worlds nations into four buckets by the Atlas Gross National Income per capita (geographically detailed HERE and listed HERE).  High income nations range from $84k to $12k per capita, Upper Middle income nations $12k-$4k per capita, Lower Middle income nations $4k to $1k, and Low income nations less than $1k per capita.  To simplify what is taking place, I sweep the high and upper middle income nations 0-65yr/old populations together (blue line below), as these nations represent 90% of the global income, savings, and access to credit.  They consume 90% of the energy and purchase 90% of the global exports.  They drive global economic activity.  Likewise, I sweep the have-nots 0-65yr/old populations together (tan line, below).

The momentous takeaway should be that population growth among the 0-65yr/old global consumers is on the precipice of ending...and the end of growth is the beginning of secular decline.  The lack of an effective transfer of wealth (and demand transfer) from haves to have nots is now a huge issue.

Perhaps it is easier to see the annual change in the two population sets, as annual growth among the consumers peaked in 1969 (blue columns below) and has been decelerating for nearly five decades.  But according to the UN, the growth of global 0-65yr/old consumers will cease in 2023 and declines among the consumers will accelerate, reaching up to -20 million annually by 2053.  As for the non-consumers (tan columns), they have progressed up and through peak growth and are now beginning a secular deceleration of growth.  To highlight which group drives demand, consumption, and inflation...I add the Federal Funds Rate (yellow line).  The FFR clearly tracked the accelerating and then decelerating growth among the consumers...and the case for ZIRP is pretty plain as a collapsing number of consumers versus rising total assets is imminent.

So, as growth among the consumers accelerated from 1950 through 1980, the Fed strangely made capital prohibitively more expensive, thus capping the growth of capacity against fast rising demand, thus stoking inflationary spirals.  Then, as the annual growth in demand began decelerating from 1980 to present, the Fed made capital progressively cheaper stoking overcapacity and deflationary excess.

If the Fed's goal was to manage the economy (and inflation and jobs within that context), the interest rate curve should have been the inverse supporting growth in capacity alongside accelerating growth in demand from 1950 to 1980.  And once demand was waning, higher rates would have been sensible to avoid cheap money fueling the creation of capacity into declelerating demand.  Whether the Fed's (and like central banks) intention was to strangle global economic activity and stoke inflation to control population growth, I have no way of knowing.  But with widely accessible birth control making child birth a conscious determination and costs of living rising well in advance of wages, each asset bubbles pushed fertility rates and population growth down further.

The chart below shows fertility rates from 1950 to 2020 and UN medium and low variants through 2100.  The UN predicts that in 2020, all regions except Africa will have fertility rates below 2.1 or negative fertility rates (ok, Asia is anticipated to turn negative by 2025).  What is surprising is the expectation that North America and Europe fertility rates will rise, particularly as they both continue to collapse to all time lows since 2007.  As for Africa, fertility rates are plummeting and expected to continue doing so...but the ongoing growth that Africa represents is not translating as it very low emigration rates, particularly compared to Central America or South Asia.

So, with tanking fertility rates and a declining childbearing population among the consumer nations ever since 2007, the confidence level is very high that growth isn't coming back any decade soon.  The chart below shows the annual change in the childbearing populations of consumers (blue columns) and non-consumers (tan columns).  This is a process of depopulation among the consumer nations that is already in the advanced stages.  Again, I include the Federal Funds Rate, as it is nearly a 1:1 match with the annual change of the consumer nations childbearing population, and the changing demand they represent.  The implication is that population growth leads (changing demand) and the Federal Funds rate follows...so ongoing rate policy shouldn't be hard to cipher.

What happens now?  A declining global workforce among the consumer nations (aka, declining potential consumers) versus the overcapacity of real goods, services, and assets (real estate, stocks, bonds, commodities).  This is a deflationary spiral only exacerbated by low rates incenting even more capacity creation thanks to ZIRP or more likely NIRP (paying debtors to take out further loans).  The cheap money is also fueling innovation, automation, robots, and autonomous vehicles, etc. (all good things, in a vacuum) that are all further exacerbating the deflationary spiral via ever greater capacity absent creating like demand.  Global commodity demand is likely to likewise collapse far sooner than anticipated and large overcapacities will likely stymy further "green" efforts.

This cheap money is rewarding asset holders more than wage earners (particularly asset-lite or asset-less young adults who comprise the childbearing population). These policies of inflating asset prices are rewarding elderly and institutions who own the bulk of assets over the young adults who are being penalized with record rents, home prices, insurance, medical costs, day care costs, and student loans, etc..  All this is further delaying marriage and family formation and only pushing fertility rates toward the low variant.  The global population is set to peak far sooner and more dramatically than the UN's current 2100'ish date.

All the D's are now in play; in the rearview mirror are the deceleration of population growth and concomitant decelerating economic growth, interest rate distortions to provide false signals to the market resulting in excessive personal, corporate, and federal debt.  The interest rate distortions have and continue to push asset price distortions.  Currently deflation is sweeping the globe, leading to upcoming outright depopulation, depression, and ultimately corporate and/or national currency defaults.  A debt and leverage based monetary system premised on continually stealing demand from an ever greater future is simply broken now.  The Ponzi is now clearly visible (how can perpetually ever more debt, upwards of $250 trillion, be repaid or even serviced by ever fewer persons of means?) but central banks are sworn to see this to it's broken end.  A terrible daisy chain of events has long been underway and although we still have better options, at every fork we seem to take the wrong turn.  In the not too distant tumult, those least responsible and those who played by the rules will likely disproportionately suffer the consequences as the bedrock on which they have built their homes, retirements, and dreams crumbles away.

Sunday, July 14, 2019

Growth Of the Global Prime-Est Of Prime Consumers Ends In 2020

In the genre of stuff matters, consider three facts.

1) On average, income and expenditures are a bell curve, rising from early adulthood, peaking in the 45 to 54 year old portion of ones life, and falling indefinitely thereafter.  The blue columns in the chart below represent average income per decade of ones life and the red columns represent expenditures.

2)  Likewise, on average, labor force participation follows a similar but more stark pattern.  About half of young adults aged 16 to 24 work, rising to over 80% by the mid portion of ones life, and falling away to just 8% working once one is 75+ years/old.So, income and expenditures rise and fall as labor force participation rises and falls…but the fall in income and expenditures is softened by cash flowing investments, savings, and Social Security and the like.  While the data above represents the US, the principle is true globally.

3) Critically, the growth of the global 45 to 54 year/old population of nations with income per capita above $4k/year (detailed by the World Bank, HERE) essentially ends in 2020, declines until 2029, rises just a tad to 2037, and falls indefinitely thereafter.  The growth of the “prime-est” of prime consumers among the nations with 90% of the income, savings, and access to credit…the nations that consume 90% of the earth’s energy and likewise global exports…comes to an end.  These nations represent half the worlds population.After 7 decades of unending growth among the most critical of earners and spenders, "the times they are a changing".  This is the new, low to no growth world we now inhabit.

If you feel I'm cherry picking or not showing the full picture, please feel free to peruse my recent article detailing the UN World Population Prospects 2019 reports, HERE.

All population data from UN World Population Prospects 2019.

Tuesday, July 9, 2019

UN World Population Prospects 2019 Highlights

Little time or energy to blog much any more, however with the recent release of the 2019 UN Population Prospects (UN data is linked HERE), I was drawn to offer some highlights since I didn't see much coverage of this report beyond that of the Pew Research Center, HERE.
In short, the 27 charts below detail one inescapable conclusion.  The end of population growth among the regions and nations that do nearly all the global consumption is upon us.  This matters because the global financial and economic systems are premised on perpetual growth, particularly population growth.  A growth based system reliant on debt and leverage simply can't work with depopulation among the segment that does the vast majority of global consuming.  Declining demand typically would mean declining prices, a death sentence for those holding 30 year mortgages, business loans, or federal debt.  Typical thinking that greater productivity or innovation can create greater economic activity is non-sensical amid depopulation.  Indefinite declines among consumers versus indefinite increases in capacity only create ever greater over-capacity and deflation.
I see two general schools of thought to deal with this problem:
1) Mismanagement of interest rate policy, QE, monetization, etc. to hyperinflate asset prices.  The outcomes are soaring prices of leveraged financial assets (particularly stocks and real estate).  The outcome is soaring asset prices and rental income for the minority asset holders.  The outcome for the young adults are record unaffordable home prices and rent to income ratios, record student loan debt, and costs of living (medical, childcare, insurance, etc.) rising far faster than wages.  This is leading to delayed marriages and delayed family formation...resulting in record low fertility rates.  Essentially, the current policies are accelerating the depopulation.
2) Austerity leading to a painful reset based on supply (overcapacity) vs. demand (depopulation).  The easily for-seeable outcomes are price collapses, recession, depression, and a hard reset until supply and demand are back in alignment.
My hope is to begin a discussion of a "third-way" that acknowledges the new low or no growth future we are in but values free market ideals and free market pricing, free of central or political goal seeking.  I don't believe in MMT or socialism and I don't believe in the current brand of quasi and supposed free market capitalism we currently employ.  Once upon a time, America created a thoughtful and reasoned framework, that eventually created broad opportunity.  Now, a new compact, respecting the original ethos but remodeled on our current and future reality is needed like never before.  I believe I have some of the right questions but unfortunately need far better minds to determine the right answers.
Anyway, without further ado...27 charts detailing the process of decelerating growth and outright depopulation.
Total Global Population - The End of Growth Among the Wealthy Nations, Decelerating Growth Among the Poor Nations
The chart below shows the total global population (according to the UN 2019 World Population Prospects report), split between the relatively wealthier regions (the Western Hemisphere, Europe (including Russia and Eastern Europe), East Asia (China, Japan, N/S Korea, Taiwan), and Oceania (Aus/NZ)) versus the poorer regions of the world (Africa and Asia except for East Asia). The years 2020 through 2100 are the UN medium and low population variants. According to the World Bank and US Energy Information Administration, these wealthy nations consume over 80% of all the energy, the global exports, and have over 80% of the income, savings, and access to credit.  The imminent end of population growth among the wealthy is numerically offset by the population growth among the poor, but the declining capacity of the wealthier consumer base is in no way offset by rising consumption among the poor.  Central banks and federal governments are attempting to synthetically create demand and centrally engineered asset prices to maintain the present system (regardless the wholly negative consequences for the vast majority). As an aside, in 2002, the world’s population of poor overtook that of the relatively wealthier.Next two charts break out the global population (and annual change) between the decelerating growth and soon to be outright decline of the wealthy regions populace versus the now decelerating growth of the poor regions.  The first chart below is the relatively wealthy regions total population (blue line) and annual growth (brown columns) plus medium and low variants through 2100.Africa and Asia (excluding East Asia) total population (blue line) and year over year change (orange columns) plus UN medium and low variants through 2100.  The poor regions have ceased accelerating annual growth and are presently at peak annual growth.  Growth will now be decelerating for the next 50 to 100 years before outright declines begin.2020 through 2100 UN Medium and Low Variants
Global population growth among the regions that do all the global consumption is within a decade to two from ending. Meanwhile, all the continuing population growth (but little growth in consumption) will be among the relatively poorest regions on earth.  The chart below shows two starkly different realities, the blue line are medium and low variants of still growing Africa & Asia (excluding East Asia).  The red lines represent the wealthier half of the world medium and low variants; including N. America, Oceania, Latin America (plus Caribbean), Europe, and East Asia.Wealthy vs. Poor Annual Population Growth as a %
Annual total population growth among wealthy versus poor regions, below.  Both groups were growing at 1.9% annually in 1950, but growth among the wealthy has decelerated over 77% and growth among the poor has decelerated almost 40% since peak growth in 1982.  Growth among the wealthier that do 80% of the global consumption will end somewhere between 2026 to 2039 and annual declines in the pre-eminent consumer base will continue indefinitely thereafter, only slightly offset by growth among the consumer base that consumes just 20% of the global total.Wealthier vs. Poorer Nations Total Populations
Narrowing in on the soon to be shrinking global consumer population, according to the UN medium variant (their base case) the global consumer population will peak in 2039…while in their low variant, the global consumer population will peak in 2026, just seven years from now.  The reality when the wealthier population is likely be begin shrinking is somewhere in the early to mid 2030's.  At that point, organic global consumption is set to begin declining regardless the likely flood of ever greater debt fueled consumption.The chart below is the same as above but showing the annual change in the medium (blue columns) and low variants (orange columns) from 2020 through 2100.  According to the UN, global population growth outside the poorest of nations in Africa and Asia will cease between 7 to 20 years from now.  From that point on, the nations that consume over 80% of the earth’s energy, global exports, and have over 80% of all the income, savings, and access to credit will be depopulating indefinitely.  By 2050, declines will range from a minimum of <-5> million to as much as <-18> million annually...and these numbers will only become more negative as time goes on.Consumer Nations vs. Poor Nations Childbearing Populations
Below, the global 15 to 40 year old childbearing population (blue line, excluding Africa/Asia…except East Asia) and the annual change (red columns).  The consumer nations childbearing population peaked in 2006 and those capable of reproduction among the wealthier nations have already fallen 80 million (a 6% decline).  The medium variant anticipates the consumer childbearing population to be nearly 500 million fewer by 2100 (40% decline)...best guess for the more pessimistic low variant has the childbearing population below its 1950 size (over a 60% decline).Below, the childbearing population for Africa and Asia (excluding East Asia).  Total population (blue line) and year over year change (red columns).  Peak annual growth was seen in 1999 at +28 million and has decelerated to +24 million as of 2019.  The constant is the decelerating growth through the end of the century, based on the medium variant...while the low variant is a much steeper deceleration and far sooner turn to outright declines.Fertility Rates
Fertility rates have long been collapsing across every region.  As of 2020, every region but Africa is anticipated to have a negative fertility rate or essentially be at zero growth as Asia and Latin America are anticipated to be.  From this point forward, all regions but Africa are anticipated to be either slightly or significantly below replacement rate while Africa is expected to transition over to negative fertility rates by mid to late century.  2020 through 2100, solid lines are medium fertility variant and dashed line low variants.A 2.1 fertility rate represents zero growth (2.1 children per female over her childbearing years).  What I highlight below is that the fertility rates of Europe, Latin America (plus Caribbean), N. America, and East Asia are all significantly below 2.1.  All are anticipated to remain significantly below replacement rate indefinitely...the only question being how far below?  Although observed rates continue to move lower, the UN base case is a marked upturn in fertility rates among all but Latin America.  This move to a slightly less negative fertility rate is unlikely and plain logic suggest we should anticipate fertility rates, births, and resultant population outcome between the medium and low variants.  As an aside, the current monetary and fiscal policies of ZIRP/NIRP, QE, etc. appear to be severely negatively impacting the young adult population via asset inflation absent wage inflation...delaying marriage and family formation.  Fair to say, the more these policies are employed, the lower the fertility rates will fall.Global Births
Total global births soared from 1950 through 1990, increasing by over 200 million births per five year periods (a 43% increase in births).  However, since 1990 through 2010, global births waned by up to 30 million per five year period...and only in the current five year period are births again estimated to hit the previous 1990 high water mark.  The medium variant anticipates births will maintain the current level (zero growth) through 2050 while the low variant anticipates total births returning to 1950's level by 2050.  The reality is likely to be somewhere in the middle of the two variants and represent outright depopulation which in the short term will be masked by elderly populations living decades longer.A key change has been the declining births (and now childbearing population) among the portions of the world that have higher incomes and consumption rates (blue line, below) versus rising births among Asia (green line, excluding East Asia) and Africa (red line).  But even births in Asia (excluding E. Asia) have peaked and been declining for over a decade now.  Now, rising births are solely in Africa, among the lowest income nations with the lowest potential for consumption.Below, global births among all but Africa/Asia (x-East Asia) have been trending down since the 1965 to 1970 period.  The chart below shows global births per 5 year periods per region plus medium and low variants through 2100.  The trend of fewer births is well entrenched.  From 2020 on, continually lower medium and low UN variants are anticipated despite the medium variant assumes rising fertility rates in the face of clear contradictory evidence.  Again, realistic birth estimates are more likely to split the difference between the medium and low variants.2017 projection vs. 2019 projection...Population Growth Downgraded 300 million
Comparing the 2017 vs. 2019 UN projections and the 2019 projection through the year 2100 was revised down by over 300 million.  The UN essentially just called predicted peak humanity and the end of global population growth.  The solid lines are total global population and columns are annual growth.  Peak annual growth took place in 1988 and the annual deceleration in growth is inexorable from this point forward.  BTW – again, this is the medium variant which is likely far too bullish on growth and significant further downgrades to UN projections should be anticipated.Global Population Growth Set to Cease Just After 2100
Annual global population growth, by age group, below.  The decelerating births (growth among young) versus the accelerating growth among elderly (those living decades longer than the previous generation).  This is so critical because growing elderly populations don't translate to economic growth.  The average 65+ year-olds have minimal labor force participation rates and earn and spend just half what those in the working age population.To highlight the changing nature of growth, the chart below details the slowing growth among young versus accelerating growth among the elderly by key years.  Again, 1988 was the year of peak annual growth but the make-up of growth since has been trending older.Global Population Growth (x-Africa) Ends in 2055
However, while Africa is about 17% of the global population and now responsible for over 30% of global births, they consume just 3% of global energy and have even less of the global income, savings, and access to credit.  While Africa is turning into the sole (net) driver of population growth, from a global economic perspective Africa is little more than an economic rounding error.  Africa (particularly sub-Saharan Africa where nearly all the population growth is taking place) also has a very low rate of emigration, particularly in comparison to the primary source of emigration, India. Removing Africa from the global population growth gives a very different look to population growth.  The chart below is global annual population growth, by decelerating total annual growth in millions (black line), decelerating percentage terms (red line), and by age groups.  By 2055, in total and percentage terms, global annual growth will cease outside of Africa.Global Working Age Population Growth (x-Africa) Ends 2044

The next chart excludes Africa and then removes the elderly and the young of the rest of the world…leaving just the annual change in the 15 to 65 year old global population…the annual change in the global working age population.  The red line is the annual percentage change of this population and the black line the annual change in millions.  Also, included is the Federal Funds rate, which seems to closely track the annual change in the 15-40 year/old childbearing population (and the changing demand they represent).

The annual growth of the global working age population peaked in 1980 at 2.3%, decelerated to 1.7% by 2003, and is now down to 0.7% annual growth.  By 2044, annual growth among the global working age population (x-Africa) will cease and decline indefinitely thereafter.High / Upper Middle Income Nations Working Age Population Growth Ends 2026
If we focus in on the nations that constitute half the worlds population but  consume 90% of earths energy, commodities, and have 90% of the income, savings, and access to credit...their 15 to 65 year old working age population growth is set to end in 2026 and decline indefinitely thereafter.  This is the group globally that consumes nearly all the global exports...without the growth of this consumer base, the bottom half of the worlds population (Africa, India, Pakistan, Indo, etc.) have declining markets to export their labor and goods to and really haven't a chance to grow beyond their domestic markets.Global Childbearing Population Growth (x-Africa) Ends 2024
Last chart, and this is so critical, the annual change in the global childbearing population (x-Africa, blue columns), stacked with the annual change in the population of young (x-Africa, green columns), and the federal funds rate (yellow dashed line).  Before you invest in commodities or real estate or pretty much anything…you should understand the future is nothing like the past.  The global population of young (x-Africa) has been declining since 1999, and the childbearing population (x-Africa) begins its decline in 2024, although the projected declines in the population of young are likely to be far larger than the UN is predicting.  This is due to the confluence of the shrinking childbearing population with ongoing declines in fertility rates, very likely to start a true birth dearth far below the gentle medium variant shown below.  As for the Federal Funds Rate, it is likely to continue following the global childbearing population and the changing demand they represent, well into negative rates.Demand is set to enter secular decline and those investing now should understand they are investing in market manipulation and inorganic inflation.  I’m not saying prices won’t rise, that equities won’t trade ever higher, that home prices won’t keep ballooning…but it won’t be based on good old supply and demand.  It will be based on political whims, Federal Reserve actions, and centrally determined valuations.  I understand that Elon Musk believes global population growth will follow the UN's low variant forecast, peaking somewhere around 2050 just below 9 billion and turning down indefinitely from there  .I'm not signing my name to that prediction, but that possibility is far greater than people seem to recognize as the daisy chain begins to unravel.
What of the US?  Best guesses HERE and  HERE.
Extra Credit - Note the collapsing populations of young and childbearing populations across broad swaths of the greatest consumer nations on earth.
East Asia (China, Japan, N/S Korea, Taiwan, Mongolia) childbearing population (blue line) and young population (green line), below.
  • Young, peaked in 1976 - declined by 138 million (32% decline) so far, projected to decline 259 million (61% decline) by 2100.  This is based on the assumption of rising fertility rates...if they remain flat or fall further, the reality is likely to be far lower!?!
  • Childbearing peaked in 2005, declined by 96 million (14% decline) so far, projected to decline 357 million (54% decline) by 2100
Europe (including Russia and Eastern Europe) childbearing population (blue line) and young population (green line), below.
  • Young peaked in 1965, declined by 48 million (29% decline) so far, projected to decline 78 million (46% decline) by 2100.  Again, this decline is based on the assumption that fertility rates will do the exact opposite of the current reality and suddenly rise?!?  If not, far lower births, young, and populations should be expected.
  • Childbearing peaked in 1989, declined by 41 million (15% decline) so far, projected to decline 105 million (39% decline) by 2100
Latin America plus Caribbean (everything in Western Hemisphere but US/Canada) childbearing population (blue line) and young population (green line), below.
  • Young peaked in 2001, declined by 11 million (7% decline) so far, projected to decline by 74 million (44% decline) by 2100.
  • Childbearing set to peak in 2025 and projected to decline by 87 million (33% decline) by 2100.
North America (US/Canada) childbearing population (blue line) and young population (green line), below.
  • Young peaked in 1965, zero growth since '65, projected to grow by 9 million (14% increase) by 2100.  I have detailed repeatedly (linked above) why given current fertility rates, trends, and immigration patterns, this is highly unlikely and continued flat to outright declines should be the base case.  Since 2007, US fertility rates have been in freefall and in 2018, the US hit a record low fertility rate of 1.72 and is still falling fast...with Canada even lower at 1.56.  There is no sign nor logical rationale to anticipate a rise in fertility rates in North America.
  • Childbearing projected to grow 13 million (11% increase) by 2100.  Again, this is premised on unrealistically high fertility rates and immigration...this is also highly unlikely and zero growth should be the base case.
ASIA (excluding East Asia) childbearing population (blue line) and young population (green line), below.
  • Young peaked in 2018, projected to decline 275 million (34% decline) by 2100.  This is India, Pakistan, Vietnam, Thailand, Indonesia, etc. plus all of Western Asia (Iraq, Iran, Turkey, Saudi Arabia, etc.).
  • Childbearing projected to peak in 2038 and decline by 240 million (20% decrease) by 2100.
Africa childbearing population (blue line) and young population (green line), below.
  • Young projected to rise 400 million and peak around 2090!?!
  • Childbearing population projected to grow nearly 1 billion through 2100.
Just to reiterate, this is the latest UN population data and the UN medium variant forward projections (which have been consistently too bullish on population growth...said otherwise, population growth among the young will almost certainly be significantly lower than presented here).  The declines in certain regions, particularly the high consumption regions of Europe and East Asia, are already massive and are economically akin to the tide permanently receding with collapsing demand due to collapsing births decades ago.  Now this secular ebb tide in demand is receding at the worst of possible times...just as the baby-boomers step aside and require ever more of the state (that the state never bothered to set aside in the first place).  The decades of interest rate cuts to incentivize decades of rising indebtedness have borrowed growth from the future to maintain the present.  Of course, now we know this was borrowing to maintain high growth from a future that was already going to be a low to no growth reality.  Now, we are simply deluding ourselves about a future reality that will not exist...and there is no path to outgrow the accumulated bad debt and resultant overcapacity given the low growth to no growth reality.  Continuing to double down on a flawed premise is only worsening the eventual workout (stealing from a fantastical future which will never exist) and making the inevitable structural changes far more painful, and the realignment of expectations even greater.