U.S. demographics and its impact on the economy

One factor that has always played out in America’s favor in the last 100 years is demographics. The baby-boom generation, immigration, inflows of skilled labor from around the world, productivity and its entrepreneurial promise has catapulted it into a super-power. But this demographic picture may be shifting now.


This article courtesy Sami Karam highlights the main demographic problems – the key points are captured below.

1) US population until 2007 was growing at over 1%, but now that has slipped to less than 1%. In the future, baby-boomer deaths will be a greater number relative to new births.

2) The Fertility rate in the US has fallen from 2.1 in 2007 to 1.9 (Graphic from The Economist)

3) Americans aged 30 to 60 years (the financially productive age group) was growing at 1% but has leveled off with no growth

4) The Dependency ratio (people below 14 years of age and above 65 to people between 15 and 65) was .67 in 1960, and it fell to 0.49 in 2005. This ratio is expected to climb to 0.56 by 2020, and back to 0.67 by 2050. This does not bode well for discretionary spending.

5) Not covered in this article is Housing – baby boomers will downsize and there is not enough buyers in the next generations (more in another post). This will impact housing supply and prices will have to come down. Housing will remain a long term problem due to this demographic shift.


As if structural factors were not enough, the economy has to battle this additional headwind in the coming years.

Share this Article

7 thoughts on “U.S. demographics and its impact on the economy

  1. Entire world’s population must stabilize and may have to reduce for growing consumption.
    Impact on economy has to be managed with steady growth of productivity and individuals have to save for future i.e. retirement. (Do not depend on State)

  2. What the fuck do they care???? Rest assured, the sluts in DC will re-imburse them. Posted by: PissedOffAmerican | Nov 15, 2012 8:15:26 PM

Leave a Reply

Your email address will not be published. Required fields are marked *

Get access to Free Courses, E-Books, Market Updates and 500+ Video Library.

Join Free Now!

Futures and Options carry risk and may not be suitable for everyone. OptionTiger is an educational site, and is not a financial adviser or broker. If you need professional investment advice, please consult a registered investment adviser. All stocks, ETFs, commodities, Indices and other securities mentioned in our courses are for educational and illustrative purposes only, including all mention of Returns, Margin Calculations, and different Margin types. By visiting our site and accessing material, you are implicitly agreeing to these terms.
Copyright © 2012 to 2018 - All Rights Reserved by OptionTiger.com