Evolving U.S. Demographic Challenges

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Evolving U.S. Demographic Challenges

According to official estimates released at year-end, the population of the United States grew just 0.48% in the 12 months ended July 1, 2019.  This is a decline of one-third from the 0.72% annual growth five years earlier.  And even that rate, last seen in 2014, was well below the 0.93% average annual growth rate between 2000 and 2010. 

This deceleration was driven by a decline in the natural growth rate of births minus deaths, which fell from 1,461,000 in 2011 to 957,000 in 2019.  This is the first time in decades that births have exceeded deaths by less than 1,000,000.  Meanwhile, a decline in net international migration was less of a factor, falling 23% from 774,000 in 2011 to 595,000 in 2019.

These trends were even more evident in the nation’s most populous state.  While the U.S. growth rate declined by a third, California’s growth rate fell by a remarkable 85%.  In 2014, California grew by 0.83%.  By 2019, growth had dropped to 0.13%, little more than one-quarter of the national rate.  In fact, for the first time in its history, California is expected to lose a seat in Congress after the 2020 census as a result of this slower growth.

Meanwhile, the nation continues to move principally to the South and secondarily to the West.  Since 2010, 4.1 million residents have moved from the Northeast and the Midwest to the South and West.  Approximately 82% of these moves have been to the South.  In the last year, the South accounted for approximately 89% of the net domestic moves between regions.

Broadly speaking, 2019 saw the lowest growth rate since the Spanish flu killed 675,000 people in 1918.  And this slower population growth is expected to accentuate the labor shortage and dampen demand for new housing and other durable goods.  So, managers and investors need to understand the causes of slower growth and consider the implications for the economy and their business planning.

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