War Room 06 Dec 2012 Demographics – They are a changin’
War Room 06 Dec 2012
Demographics – They are a changin’
War Room•Monthly macro discussion
•Using tools in context
•Update on HiddenLevers Features
•Your feedback welcome
Demographics – They are a changin’
I. Demographics – Where are we now?
II. Demographics – Where are we going?
III. Scenarios
IV. Product Update
HiddenLevers
DEMOGRAPHICS – WHERE ARE WE NOW?
USA – Current age demographics
Reading population graphs
Show distribution of various age groups in a population
• Pyramid = expanding more young people + less old people
• House = stationary young people + seniors emerging
• Kite = contracting more old people + not reproducing
• Wide base pyramid = youth bulge social unrest + recessions
More on population pyramids
INDIAexpanding
BRAZILcontracting
CHINA contracting
(birth policy)
Comparison – Age demographics as Destiny
Middle-EastYouth Bulge Evident
Egypt
Jordan
Gaza
Yemen
USA – current diversity demographics
• Minority babies exceeded white babies in late 2011
• Recent projections show whites falling below 50% of total population by 2050.
US Election Demographics: 1980 vs 2012
88%
10% 2%
1980 Presidential ElectionSources: UConn Roper Center Archives, 2012 Exit Polling
72%
13%
10%5%
2012 Presidential Election
White Black Hispanic Other
• Brookings Institute: Minorities likely decided 2012 election
• 2012 - most racially polarized election in history
DEMOGRAPHICS – WHERE ARE WE GOING?HiddenLevers
US Age Demographics - Projected
US population aging rapidly, but base of pyramid should remain in tact
2010 2050
USA Age Demographics - International Context
bottom line1. USA in better shape than Europe + Japan2. USA in no worse shape than China
• US fertility rate at roughly replacement level of 2.1, compared to Japan at 1.36
• US non-immigrant population is aging rapidly, as in Europe + Japan
(US is one generation behind them)
• Majority of US population growth to 2050 expected to be via immigration (contrast to 0 immigration in Japan)
• Despite aging of America, US working age population in 2050 will be around 300 million, equaling today’s total population
Japan: Will USA follow same pattern?
healthy age demographics … not so much
Japan: Demographic Disaster in Slow-Motion
Japan population aging into dustbin
Who you callin’ dependent?
Japan: Demographics + GDP
bottom lineYOUNGER POPULATION =
SUSTAINABLE GDP GROWTH
I knew it was da yoots.
USA – Diversity ProjectionsVirtually all future US population growth among minorities
• White + Black steady. Hispanic grows most
• Population growth since 1980 from immigration: 58%
• Population growth until 2050 from immigration: 80%
• GDP growth depends on education of immigrants
No, we are not turning Japanese
Fruits
Immigration – Busted Myths
Myth
1. Mexicans coming in droves
2. Immigrants taking US jobs
3. Immigration at all-time highs
Reality
• Net Migration from Mexico now negative• border arrests down 50% since 2008• Illegal immigrant population not growing
• 12.5% of population, 15% of workforce• overrepresented due to aging domestics
• 14.9% of population was immigrants in 1890. Currently 12.5%
• Two thirds legal, one third illegal• 10.8 illegals – 40% came in legally
DEMOGRAPHICS - SCENARIOSHiddenLevers Baby Bust Brain Drain Beneficiary
Downside Scenario: Aging Baby BoomersSF Federal Reserve
• Direct relationship between age demographics + P/E ratios
• Baby boomers aging, withdrawing from markets
• Downturn continues into 2020’s
Upside Scenario: Brain Drain Beneficiaries
bottom linedeveloped country realities mean
immigration is a necessity for growth
Smart immigration can avert Baby Bust
• Merit-based immigration reform
• Making it easy for world’s best + brightest to come to USA
• Educating children of immigrants already here
• Smart immigrants = GDP growth back above 3%
Guidance
1. Successful immigration form based on merit
2. GDP growth back above 3% due to immigration
3. Increased spending due to prime working-age immigrants
4. Only chance for GDP growth in developed countries
Demographics – Baby Bust or Brain Drain Beneficiary?
Guidance
1. Baby Boomers withdrawing assets to fund retirement
2. GDP stagnant to declining, similar to Japan
3. Retail Sales takes a hit as Boomers stop spending
5. SF Fed research projects nearly 50% drop in S&P
HiddenLevers – Product Update
• Interactive Lead Generation App
• Integrations: - Schwab Portfolio Center - Fortigent
• UI: Buttons + Sorting of Advanced Stats
Coming soon:1. PDF-friendly versions of all HiddenLevers pages
2. Annual feedback session - what do you want to see?