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.
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.