Demographic Winter Comes to America

US Births and Deaths by County Chart

Demographic Winter occurs when a country or state is facing long-term population decline due to falling birth rates, as is now happening in Japan, Russia and much of Western Europe. Put simply, there are not enough young people to replace older generations as they die off.

Demographic Winter will have severe economic consequences. In economic terms, this means fewer workers will be available to businesses, and there will be fewer customers to buy their goods and services.  This dynamic creates the conditions of an economic depression in which business revenue falls year after year simply because there are fewer and fewer customers.

According to the most recent 2012 “components of population change” (xls) data from the U.S. Census Bureau, there are now two states where there are more deaths than births–Maine with 103 more deaths than births and West Virginia with 1,606 more deaths than births.

But wait . . . there’s more. If you drill down to the 2012 county level components of population change data you will find that one of every three counties in America has more deaths than births. As shown in the graphic above, it appears that nearly every state, except Utah and New Jersey, has a dying county.

As I mentioned at the beginning of this post, Demographic Winter will have severe economic consequences–how severe? Rob Arnott and Denise Chaves recently studied the economic impact of Demographic Winter and found that:

“Our main goal in presenting these results is to correct the common misconception that developed countries went through a ‘normal’ period of high growth, as if we are all entitled to fast-growing prosperity. In reality, the developed world is entering a new phase in which the low fertility rates of past decades lead to slow growth (in many countries, no growth) in the young adult population; young adults are the dominant engine for GDP growth.”

Based on this negative economic impact of declining young people, they were able to estimate how this will affect future growth in Gross Domestic Product (GDP). They found that over the past 60 years, demographics added about 1 percentage point to America’s GDP growth. So if 3 percent GDP growth is considered normal, the reality is that 2 percent was productivity growth (producing more with less) while 1 percent was demographic growth.

With Demographic Winter, they estimate that the plus 1 percent due to demographics becomes a negative -1 percent (a 2 percentage point swing). The “new normal” for economic growth in America becomes 1 percent–2 percent productivity growth with a demographic drag of -1 percent.

Needless to say, this is very bad news. The American economic dynamo that we all know today will slow to a crawl and recessions and depressions will become more frequent. This will certainly spill over into politics–after all older people vote and young people not-so-much–which will likely have additional negative impacts on the economy and, more importantly, personal liberty.

There are many reasons for Demographic Winter coming to America–ranging from issues such as birth control to educated women. I will explore potential solutions in future posts, but for now we need to spread the word about Demographic Winter. Check out the movie titled “Demographic Winter” below . . . it’s worth the trip.