15 to 64 year old US working age population versus Federal Funds Rate & US currency in circulation. Honestly, no words are necessary.
Thursday, April 15, 2021
Friday, March 5, 2021
Next to language, money is the most important medium through which modern society communicates. The Federal Reserve is responsible for signaling how fast this money should be created or destroyed via its federal funds interest rate. When demand is high and capacity/supply low, the Fed should ideally make rates low to support growth of loans to boost capacity/supply. When demand is low and capacity/supply high...the opposite. Instead, the Fed is doing the inverse...trying to focus on getting consumers to use more credit/debt (think record low mortgage rates) to create more demand and necessitate higher capacity (think homebuilders).
In a ridiculously difficult chart to decipher below (so I'm told), I highlight the year over year change in working age population (yellow shaded area), year over year change in employees among them (grey shaded area), housing permits (blue line), and the 30 year mortgage rate (white line...driven by the Federal Reserve's federal funds rate and MBS purchasing). The current situation of soaring permits against declining working age population and tanking employees among them...overridden by the speculative fervor created by record low mortgage rates is a case in point.
But in an economy, the production and consumption of goods and services are used to fulfill the wants and needs of those living within it. Very basically, the major driver of economic growth is the growth of that population of consumers, their income, savings, and access to credit. If that population is growing at 1.5% annually then you can add an additional 1.5%+ growth for maintaining &/or building out greater production, supply chain, housing, infrastructure, etc to support that larger consumer base. This essentially gets us to a 3% growth in GDP.
So what is happening when there is little, no, or negative population (consumer) growth but GDP growth is still being targeted at 1.5% or 3% or (as in China's case) 6%? What the Fed is trying to do is get a zero population growth (trending to declining population) economy to "grow" via cheaper debt, more debt, and serial bubble blowing. If I was a PhD at the Fed, I'm pretty sure I'd make it sound more complicated and mysterious...but I'm not and it isn't.
Anyway, couple of interesting factoids I thought I'd put out today that may be tangentially of interest. If Brookings Institute (and many others) are correct in their research that 2021 births are likely to decline somewhere between 300k-500k due to the pandemic...2021 births will essentially be back at the same total number of births as 1921...exactly 100 years ago, in the wake of the influenza pandemic (chart below).
Friday, February 19, 2021
Some folks want to make economics seem complicated. It ain't. Any who, some charts depicting the US economy...through demographics.
First, 15 to 54 year old US population (blue line) and those employed among that population (green line). You may note the end of population growth among them in '07 and not only the end but a significant decline in employment among them since '07. This is the population segment that undertakes most of the credit (creating the new $'s via undertaking debt...vs. elderly who destroy $'s via deleveraging/paying off their loans), buys most the homes, spends the most, earns the most. The lack of growth among them is paramount in understanding what took place in '08 as potential new home buyers ceased to exist and banks gave credit to anyone to keep the party going...'08 (and what has come since) was an entirely predictable demographic caused crisis.
Sunday, February 14, 2021
Play along with me while we consider the ultimate barometers of economic wellbeing that are fertility rates and births across the developed world, China, and the RoW (rest of the world). How fertility rates have freefallen to predominantly negative rates. How the developed nations fertility rates turned negative first, then China, then most the RoW (& soon nearly the entire world).
A quick perusal of the chart of global fertility rates, by income groups below, shows a sharp and sustained drop in global fertility since 1970. It is well understood how (and why) China did this...less well understood how (and why) the developed world got there first and has sustained it for decades. My supposition is that declining fertility rates worldwide are primarily due to central bank set interest rate policies which have consistently encouraged debt and asset inflation well ahead of real income inflation. These rising costs of living have particularly punished those with little or no offsetting assets...chief among these, young adults among the childbearing population. The decades long squeeze has slowed marriages to a crawl and sent births tumbling. Given family formation and childbirth are a choice now with widely available contraception...the choice is increasingly, no.
Data below is from UN World Population Prospects 2019...future fertility and birth estimates are a more realistic average between UN median and low estimates.
Sunday, January 24, 2021
Pretty simple story today. Covid is primarily an old persons disease and the elderly population of "at-risk" is in the process of ballooning, thus Covid (or like diseases that might not have even previously qualified as pandemics)...are finding fertile ground among the significantly enlarging elderly populations.
With almost 96% of the US Covid related deaths among the 50+ year old population, despite the majority (65%) of cases among the under 50 year old population, it should be obvious Covid is a relatively higher risk for elderly and relatively low risk for younger persons.
According to the CDC Covid Data Tracker (found HERE), mortality among under 50 year old Covid patients is rare. Of the nearly 12 million cases among under 50 year olds, nearly 13,000 resulted in death (less than 2,000 deaths among the over 6 million cases among under 30 year olds). This is a mortality rate of 0.11% among under 50 year olds. Meanwhile, the 6.4 million Covid cases among 50+ year olds resulted in nearly 280,000 deaths, a mortality rate of 4.57% (yes, CDC data differs from other sources in total cases, deaths...but the CDC demographic breakdown of those deaths is the critical part...bear with me).
- Under 30 year olds = 0.2% of deaths, 8.5% of the hospitalized, 36% of cases
- 30-60 year olds = 9% of deaths, 32% of the hospitalized, 46% of cases
- 60+ year olds = 90.8% of deaths, 59.5% of the hospitalized, 17% of cases