The daily noise of the economy, politics, and markets makes it very difficult to take the long view, but I try very hard (with mixed success) to “look around the corner.” One sweeping trend that does not garner enough discussion is the major demographic changes that are occurring and will continue to take place in the U.S. This topic deserves a much longer treatise, but here are a few tidbits to whet your appetite.
• By 2034, the number of older adults will outnumber children for the first time in U.S. history. The share of people over 65 will grow from 15% in 2016 to 25% by 2060.
• The fastest growing racial or ethnic group will be People of Two or More Races. The only group expected to shrink is the Non-Hispanic White population. That group has already declined from 63.8% of the population in 2010 to 59.7% currently.
• In 2019, an all-time low of 52% of the adult population was married. An all-time high of 33% has never been married as compared to 23% in 1950.
• U.S. population growth over the past ten years has averaged 2.3 million per annum. Annual growth is expected to fall to 1.5 million by 2040, and that growth will be dominated by immigration. As early as 2028, the foreign-born share of the population will reach the level that was last experienced in the immigration boom of the 1850’s.
• While the rate of population growth will slow in the U.S., it will exceed that of Japan and some European countries that are expected to experience actual declines with negative implications for economic growth.
• Currently, there are three-and-one-half working adults for very person eligible for Social Security. That ratio is expected to fall to two-and one-half by 2060.
• Inequality continues to widen. Since 1990, the top 1% of households increased their share of wealth from 23% to 31%, and the bottom 50% of households now control only about 2% of total U.S. wealth.
The bottom line is that the U.S. will be an older, more racially and ethnically pluralistic society. I will leave it to greater minds to assess the impact of these changes on politics, social mores, and the markets. However, I do know that the financial services industry will be forced to rethink its product lineup as well as develop new approaches to reaching a population that is very different from its traditional client base.