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.

8 comments:

  1. Do you think Western migration policy is related to this development? That is, to sustain production and consumption growth?

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    1. Hey Anders - I assume yes but given the migrants are quickly norming to the fertility rates of their new host nations, this doesn't really seem to be solving anything. The issues are policies that are ultimately leading to the lack of desire / capability to further the species. This is pretty fundamental stuff but when humans, on a net basis, are no longer interested in reproducing and passing on a legacy...we should be questioning the very premise of advancement. I'm not suggesting unending growth is necessary or good, but what we are moving towards is quite the opposite, a collapsing population of young (and a general collapse eventually) briefly masked by the lengthening of the elderly lifespans.

      There is no stabilization or equilibrium, just boom and bust repeated in finance, economics, and overall populations. Growth in Africa may as well be on Mars given the very low rates of emigration from this region and very low economic activity in this region.

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  2. Glad to see you posting again.

    I was disappointed you closed the blog last time.

    I doubt this blog gets much traffic but you can see your articles get a significant number of comments on ZH.

    Keep writing, people are reading.

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    1. @ Anon,
      thanks, needed a break to focus on other more personal topics. Not sure I've much more to say...but you never know.

      All the best,
      Chris

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  3. Did you erase your archive?! Don't be silly. You've done extremely important analyses, I know folks at the World Bank reading your blog, so please re-upload your posts and don't destroy your site.

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    Replies
    1. Was job hunting and these are not helpful to my potential employment...didn't work out, so back up it goes.
      Cheers

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  4. Hi Chris,

    You've inspired me to starting digging into this phenomenon through the FRED datasets. I've see a correlation between the year over year changes in US working population 15-64 and YOY changes in US EFFR.

    Are you able to shed any insight into why interest rates tend to rise as the working population increases? I think there's a correlation but am still researching why that may be? I'm trying to understand where interest rates are heading.

    I can't imagine interest rates will stay low forever, but without increases in the working population too, I can't imagine rates will rise.

    Thanks for opening your blog again!

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    Replies
    1. Hey Peter - the highest correlation seems to be the Fed Funds rate to the annual change in the childbearing population. This is just saying as demand rises faster than capacity, organic inflation is the result. And the opposite is true as well.

      But now, with organic deflation the natural state of things, the Fed is all in to create inorganic asset inflation...and this is where all sorts of problems ensue.

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