by Patrick Fearon-Hernandez, CFA

In Part I of this report, we looked at current key global population trends.  The report discussed how plunging birth rates have been weighing on population growth and boosting average ages all over the world, with a potentially huge impact on the distribution of geopolitical power, economic prospects and future investment returns.  In Part II, we showed how these demographic trends are playing out for the world’s sole superpower and most important economy: the United States.

This week, in the final segment of this report, we’ll dive deeper into the economic implications of slowing population growth and an aging population.  Our analysis will show that these demographic trends are likely to weigh heavily on future economic growth and inflation.  The trends may well impact standards of living and constrain monetary and fiscal policy in important ways.  We’ll conclude with a discussion of the long-term ramifications for investors, although it’s important to remember that many other forces can have a greater impact on investment returns in the short term.

View the full report

by Patrick Fearon-Hernandez, CFA

In Part I of this report, we looked at current key global population trends.  The report showed how plunging birth rates have been weighing on population growth and boosting average ages all over the world, potentially having a huge impact on the distribution of geopolitical power, economic prospects and future investment returns.  An important countertrend is that urbanization is accelerating, with city populations growing relatively faster while rural populations stagnate or decline.  Part I noted that stronger innovation and productivity could help offset the negative impact of slowing population growth and population aging, but the world’s education systems are not rising to the occasion so far.

This week, in Part II, we will show how these demographic trends are playing out for the world’s sole superpower and most important economy: the United States.  Part III will dive deeper into the economic impact of slowing population growth and population aging, and, as always, conclude with a discussion of the ramifications for investors.

View the full report

by Patrick Fearon-Hernandez, CFA

(Note: Due to the President’s Day holiday, our next report will be published on February 24.)

In the 1960s and 1970s, people worried a lot about rapid population growth.  According to the United Nations, the world’s population was growing at an average annual rate of more than 1.9% during those decades, jumping from 3.0 billion in 1960 to 4.5 billion in 1980.  That created a lot of concern about the implications for the environment, social stability, and the economy.  However, many people don’t realize that population growth has slowed dramatically since then.  The global population is expected to grow only about 1.05% in 2020, and growth is projected to slow all the way to zero by 2200.  This dramatic slowing and the associated aging of the population are already having a big impact on society.

In theory and practice, population trends should affect investment returns, even if it’s hard to separate their impact from other, shorter-term economic and financial factors.  This three-part series aims to lay out the broad contours of today’s global population story, with a focus on last year’s updated forecasts from the UN Population Division.

Part I of the report will focus on the broad contours of today’s global population trends and what they mean for relative geopolitical power in the coming decades.  In two weeks, Part II will focus on specific demographic trends in the United States.  The following week, Part III will examine the economic impact of these trends.  Many other forces will have a greater impact on investments in the short run, but Part III will conclude with a discussion of how these demographic trends are likely to affect the financial markets in the long run.

View the full report