by Bill McBride on 5/07/2015 01:15:00 PM
Thursday, May 07, 2015
Yesterday I pointed out that a blog post on demographics at the Financial Times would make more sense if it had been written a decade ago.
A decade ago it was obvious that demographics would be a drag on the economy. Even without the financial crisis, we would have expected a slowdown in growth.
But now the prime working age population is growing again, and we can expect growth to pick up over the next decade.
Here is a graph of the prime working age population (this is population, not the labor force) from 1948 through March 2015 - with projections from the Census Bureau through 2040.
Click on graph for larger image.
In the '80s, the prime working age population was growing 2% or more per year. Over the last 10 years (March 2005 through March 2015), the prime working age population was mostly unchanged (up less than 1% for the decade).
That is key reason that growth has slowed (see Demographics and GDP: 2% is the new 4%). Add the residual effects of the financial crisis to the drag from demographics - and the last decade was no surprise.
Going forward, the prime working age population will grow at a 0.5% to 1.0% annual rate (Census projections). This isn't the 2%+ per year of the 1980s, but it is still decent growth.
Demographics are now improving in the U.S..