Demographics: Global Implications for Economic Growth and Investment

Demographics: Global Implications for Economic Growth and Investment 30th Annual Monetary & Trade Conference Drexel University Philadelphia, Pennsylvania

Richard F. Hokenson April 24 ,2012

The Speed of Aging: Developed Countries

Number of Years for Percent of Population 65+ to rise from 7 to 14 percent 115

France (1865-1980) Sw eden (1890-1975) Australia (1938U.S. (1944-2013) Canada (1944-2009) Hungary (1941-1994) Poland (1966-2013) U.K. (1930-1975) Spain (1947-1992) Japan (1970-1996)

85 73 69 65 53 47 45 45 26 0

20

40

60

80

100

120

140

Speed of Aging: Developing Countries

Number of Years for Percent of Population 65+ to rise from 7 to 14 percent 27 27 25 24 23 23 22 21 20

China (2000-2027) Singapore (2001Chile (2000-2025) Jamaica (2009-2033) Sri Lanka (2004-2027) Tunisia (2009-2032) Thailand (2003-2025) Brazil (2011-2032) Colombia (2017-2037)

0

20

40

60

80

100

120

140

United Nations – Total Fertility Rate by Development Status

The United Nations Forecast through the year 2100

Total Population in Billions

Annual Percent Change

2050 Population as a Multiple of 2010

No data

0.7 < 1.0

1.0 < 1.3

Source: Population Reference Bureau 2011 World Population Data Sheet; Hokenson & Company.

1.3 < 1.9

1.9 < 3.4

Demographics and Destiny

Maximum Effective Capital Gains Tax Rate versus Percentage of Young Taxpayers 50

36

45

34

40

Percent

35

32

30

30

25

28

20

26

15 10

24 22

0

20

19 50 19 55 19 60 19 65 19 70 19 75 19 80 19 85 19 90 19 95 20 00 20 05 20 10 20 15 20 20

5

Source: U.S. Treasury; Hokenson & Company

Tax Rate % Young

The Era of Low Interest Rates has only just begun

Yield on Long-Term Treasuries versus Smoothed Growth in Current Dollar GDP

U.S. Current Dollar GDP (Year-ago Change (bars) and Smoothed 10-Year Change (line))

U.S.: Smoothed Growth in Current Dollar GDP and Labor Force

U.S.: Smoothed Growth in Current Dollar GDP and Forecasted Labor Force

Yield on Long-Term Treasuries versus Historical and Forecasted Growth in Current Dollar GDP

Population Trends in

The Developed World

The Developed World Population Change by Age Groups in Millions: 2005-2015

15

Japan and Europe

16

17

Western Europe Population Change by Age Groups in Millions: 2005-2015

18

Europe â&#x20AC;&#x201C; Countries above or below average median age 1960 vs 2060

Aging in the European Union E.U. & Candidates Aged Dependency Ratios (population 65+ as a percent of 15 to 64)

55 50 45 40 35 30 25 20 15 2000

2005

2010

2015 EU

2020

2025

EU + Candidates

Sources: US Census Bureau, International Data Base; Hokenson & Company

2030

2035

2040

EU + Candidates ex Turkey

2045

2050

The American “Exception”

21

Total Fertility Rate for Selected Regions and Countries: 2010 2.2 2.0 1.8 1.6 1.4 1.2 1.0 United States

Western East Europe Europe

Japan

Russia

China

Source: United Nations; Hokenson & Company.

22

Legal Immigration

23

US: Number of Live Births in Millions

24

Annual Household Formations and Housing Completions

25

Percent Reaching Stated Anniversary by Marriage Cohort for Women's First Marriages: 2009

26

US versus Eurozone

27

Social (In)Security?

28

United States: Population in Millions (2010)

29

United States: Population in Millions (2050) 100+ 95-99 90-94 85-89 80-84 75-79 70-74 65-69 60-64 55-59 50-54 45-49 40-44 35-39 30-34 25-29 20-24 15-19 10-14 5-9 0-4

Male

15 10 5 Sources: United Nations; Hokenson & Company.

Female

0

5

10

15

30

Brazil

Russia

India

China

Russian Federation: Life Expectancy at Birth

Russian Federation : Number of Entry-Level Workers 26 24

Millions

22 20 18 16 14 12 10 1990

2000

2010

Sources: United Nations; Hokenson & Company.

2020

2030

2040

2050

China Population Change by Age Groups in Millions: 2005-2015

60 50 40 30 20 10 0 -10 -20 -30 -40 0-9

10-19 20-29 30-39 40-49 50-59 60-69 70-79

80+

China: Population of Working Age

35

The Aging Index: China versus the US

Ratio

180 160 140 120 100 80 60 40 20 0 1990 2000 2010 2020 2030 Sources: United Nations; Hokenson & Company.

USA China

2040

2050

India Population Change by Age Groups in Millions: 2005-2015

35 30 25 20 15 10 5 0 -5 0-9

10-19 20-29 30-39 40-49 50-59 60-69 70-79 80+

India: Number of Entry-Level Workers 230 220

Millions

210 200 190 180 170 160 1990

2000

2010

Sources: United Nations; Hokenson & Company.

2020

2030

2040

2050

Brazil Population Change by Age Groups in Millions: 2005-2015

7 6 5 4 3 2 1 0 -1 -2 -3 0-9

10-19 20-29 30-39 40-49 50-59 60-69 70-79

80+

Brazil : Number of Entry-Level Workers

41

Important Changes in the Financial Arrangements of Households

U.S. Households with more MONEY than TIME (Number of U.S. Families with Two or More Earners)

U.S. Households with more TIME than MONEY (Number of U.S. Families with One Earner)

Suggested Readings and References Birth and Fortune: The Impact of Numbers on Personal Welfare by Richard Easterlin

The Great Wave: Price Revolutions and the Rhythm of History by David Hackett Fisher The Feminine Mystique by Betty Friedan The Age of Discontinuity by Peter Drucker Population and Development Review

Richard F. Hokenson rhokenson@hokenson.biz (609) 516-7780

45