By C Hamilton
Total Global Population - The End of Growth Among the Wealthy Nations, Decelerating Growth Among the Poor Nations
Little time or energy to blog much any more, but with the recent release of the 2019 UN Population Prospects, I thought I'd offer some highlights.
The chart below shows the total global population (according to the UN 2019 World Population Prospects report), split between the relatively wealthier regions (the Western Hemisphere, Europe (including Russia and Eastern Europe), East Asia (China, Japan, N/S Korea, Taiwan), and Oceania (Aus/NZ)) versus the poorer regions of the world (Africa and Asia except for East Asia). The years 2020 through 2100 are the UN medium and low population variants. According to the World Bank and US Energy Information Administration, these wealthy nations consume over 80% of all the energy, the global exports, and have over 80% of the income, savings, and access to credit. The imminent end of population growth among the wealthy is numerically offset by the population growth among the poor, but the declining capacity of the wealthier consumer base is in no way offset by rising consumption among the poor. Central banks and federal governments are attempting to synthetically create demand and centrally engineered asset prices to maintain the present system (regardless the wholly negative consequences for the vast majority). As an aside, in 2002, the world’s population of poor overtook that of the relatively wealthier.
Next two charts break out the global population (and growth) between the decelerating growth and soon to be outright decline of the wealthy nations populace versus the decelerating growth of the poor. The chart below is the relatively wealthy regions total population (blue line) and annual growth (brown columns) plus medium and low variants through 2100.
Africa and Asia (excluding East Asia) total population (blue line) and year over year change (orange columns) plus UN medium and low variants through 2100. The poor nations are presently at peak annual growth and decelerating growth will likely continue for the next 50 to 100 years before declines begin.
2020 through 2100 UN Medium and Low Variants
Global population growth among the regions that do all the global consumption is within a decade to two from ending. Meanwhile, all the continuing growth will be among the relatively poorest regions on earth (all data shown is extracted from the 2019 UN World Population Prospects). The chart below shows two starkly different realities, the blue line are medium and low variants of still growing Africa & Asia excluding East Asia…(China, Japan, N/S Korea, Taiwan). The wealthier half, the brown lines, are the medium and low variants of the rest of the world including N. America, Oceania, Latin America (plus Caribbean), Europe, and East Asia. This is everybody on planet earth.
Wealthy vs. Poor Annual Population Growth as a %
Annual total population growth among wealthy versus poor regions. Both were growing at 1.9% annually in 1950, but growth among the wealthy has decelerated over 77% and growth among the poor has decelerated almost 40% since peak growth in 1982. Growth among the wealthier that do 80% of the global consumption will end somewhere between 2026 to 2039 and annual declines in the pre-eminent consumer base will continue indefinitely thereafter only slightly offset by growth among the consumer base that consumes 20% globally.
Wealthier vs. Poorer Nations Total Populations
Narrowing in on the soon to be shrinking global consumer population, according to the UN medium variant (their base case) the global consumer population will peak in 2039…while in their low variant, the global consumer population will peak in 2026, just seven years from now. At that point, organic global consumption is set to begin declining unless a continually shrinking population is capable of continually greater debt fueled consumptive growth.
The same as above but showing the annual change in the medium and low variants from 2020 through 2100. According to the UN, global population growth outside the poorest of nations in Africa and Asia will cease between 7 to 20 years from now. From that point on, the nations that consume over 80% of the earth’s energy, global exports, and have over 80% of all the income, savings, and access to credit will be depopulating indefinitely. By 2050, declines will range from a minimum of <-5> million to <-18> million annually...and these numbers will only become more negative as time goes on.
Consumer Nations vs. Poor Nations Childbearing Populations
Below, the global 15 to 40 year old childbearing population (blue line, excluding Africa/Asia…except East Asia) and the annual change (red columns). The consumer nations childbearing population peak was in 2006 and those capable of reproduction among the wealthier nations have already fallen 80 million. The medium variant anticipates the consumer childbearing population to be nearly 500 million fewer by 2100...the more pessimistic low variant has the childbearing population below its 1950 size.
Below, the childbearing population for Africa and Asia (excluding East Asia). Total population (blue line) and year over year change (red columns). Peak annual growth was seen in 1999 at +28 million and has decelerated to +24 million as of 2019. The constant is the decelerating growth through the end of the century, based on the medium variant...while the low variant is a much steeper deceleration and far sooner turn to outright declines.
Fertility rates have long been collapsing across every region. As of 2020, every region but Africa is anticipated to have a negative fertility rate or essentially be at zero growth as Asia and Latin America are anticipated to be. From this point forward, all regions but Africa are anticipated to be either slightly or significantly below replacement rate while Africa is expected to transition over to negative fertility rates by mid to late century.
A 2.1 fertility rate represents zero growth (2.1 children per female over her childbearing years). What I highlight below is that the fertility rates of Europe, Latin America (plus Caribbean), N. America, and East Asia are all significantly below 2.1. All are anticipated to remain significantly below replacement rate indefinitely...the only question being how far below? Although observed rates continue to move lower, the UN base case is a marked upturn in fertility rates among all but Latin America. This move to a slightly less negative fertility rate is unlikely and plain logic suggest we should anticipate fertility rates, births, and resultant population outcome between the medium and low variants. As an aside, the current monetary and fiscal policies of ZIRP/NIRP, QE, etc. appear to be severely negatively impacting the young adult population via asset inflation absent wage inflation...delaying marriage and family formation. Fair to say, the more these policies are employed, the lower the fertility rates will fall.
Total global births soared from 1950 through 1990, increasing by over 200 million births per five year periods. However, since 1990, global births waned and only in the current five year period are births again estimated to hit the previous 1990 high water mark. The medium variant anticipates births will maintain the current level (no growth) through 2050 while the low variant anticipates total births returning to 1950's level by 2050...the reality is likely to be somewhere in the middle of the two variants.
A key change has been the declining births (and now childbearing population) among the portions of the world that have higher incomes and consumption rates (blue line, below) versus rising births among Asia (green line, excluding East Asia) and Africa (red line). But even births in Asia (excluding E. Asia) have peaked and been declining for over a decade now. Now, rising births are solely in Africa, among the lowest income nations with the lowest potential for consumption.
Below, global births among all but Africa/Asia (x-East Asia) have been trending down since the 1965 to 1970 period. The chart below shows global births per 5 year periods per region plus medium and low variants through 2100. The trend of fewer births is well entrenched. From 2020 on, continually lower medium and low UN variants are anticipated despite the medium variant assumes rising fertility rates in the face of clear contradictory evidence. Again, realistic birth estimates are more likely to split the difference between the medium and low variants.
2017 projection vs. 2019 projection...Population Growth Downgraded 300 million
Comparing the 2017 vs. 2019 UN projections and the 2019 projection through the year 2100 was revised down by over 300 million. The UN essentially just called predicted peak humanity and the end of global population growth. The solid lines are total global population and columns are annual growth. Peak annual growth took place in 1988 and the annual deceleration in growth is inexorable from this point forward. BTW – again, this is the medium variant which is likely far too bullish on growth and significant further downgrades to UN projections should be anticipated (UN data is linked HERE).
Global Population Growth Set to Cease Just After 2100
Annual global population growth, by age group, below. The decelerating births (growth among young) versus the accelerating growth among elderly (those living decades longer than the previous generation). This is so critical because growing elderly populations don't translate to economic growth. The average 65+ year olds have minimal labor force participation rates and earn and spend just half what those in the working age population.
To highlight the changing nature of growth, the chart below details the slowing growth among young versus accelerating growth among the elderly by key years. Again, 1988 was the year of peak annual growth but the make-up of growth since has been trending older.
Global Population Growth (x-Africa) Ends in 2055
However, while Africa is about 17% of the global population and now responsible for over 30% of global births, they consume just 3% of global energy and have even less of the global income, savings, and access to credit. While Africa is turning into the sole (net) driver of population growth, from a global economic perspective Africa is little more than an economic rounding error. Africa (particularly sub-Saharan Africa where nearly all the population growth is taking place) also has a very low rate of emigration, particularly in comparison to the primary source of emigration, India. Removing Africa from the global population growth gives a very different look to population growth. The chart below is global annual population growth, by decelerating total annual growth in millions (black line), decelerating percentage terms (red line), and by age groups. By 2055, in total and percentage terms, global annual growth will cease outside of Africa.
Global Working Age Population Growth (x-Africa) Ends 2044
The next chart excludes Africa and then removes the elderly and the young of the rest of the world…leaving just the annual change in the 15 to 65 year old global population…the annual change in the global working age population. The red line is the annual percentage change of this population and the black line the annual change in millions. Also, included is the Federal Funds rate, which seems to closely track the annual change in the 15-40 year/old childbearing population.
The annual growth of the global working age population peaked in 1980 at 2.3%, decelerated to 1.7% by 2003, and is now down to 0.7% annual growth. By 2044, annual growth among the global working age population (x-Africa) will cease and decline indefinitely thereafter.
High / Upper Middle Income Nations Working Age Population Growth Ends 2026
If we focus in on the nations that constitute half the worlds population but consume 90% of earths energy, commodities, and have 90% of the income, savings, and access to credit...their 15 to 65 year old working age population growth is set to end in 2026 and decline indefinitely thereafter. This is the group globally that consumes nearly all the global exports...without the growth of this consumer base, the bottom half of the worlds population (Africa, India, Pakistan, Indo, etc.) have declining markets to export their labor and goods to and really haven't a chance to grow beyond their domestic markets.
Global Childbearing Population Growth (x-Africa) Ends 2024
Last chart, and this is so critical, the annual change in the global childbearing population (x-Africa, blue columns), stacked with the annual change in the population of young (x-Africa, green columns), and the federal funds rate (yellow dashed line). Before you invest in commodities or real estate or pretty much anything…you should understand the future is nothing like the past. The global population of young (x-Africa) has been declining since 1999, and the childbearing population (x-Africa) begins its decline in 2024, although the projected declines in the population of young are likely to be far larger than the UN is predicting. Far larger declines in the population of young (due to the coupling of the shrinking childbearing population with declining fertility rates) are very likely to start a true birth dearth…far below the gentle medium variant shown below. As for the Federal Funds Rate, it is likely to continue following the global childbearing population, well into negative rates.
Demand is set to enter secular decline and those investing now should understand they are investing in market manipulation and inorganic inflation. I’m not saying prices won’t rise, that equities won’t trade ever higher, that home prices won’t keep ballooning…but it won’t be based on good old supply and demand. It will be based on political whims, Federal Reserve actions, and centrally determined valuations. I understand that Elon Musk believes global population growth will follow the UN's low variant forecast, peaking somewhere around 2050 just below 9 billion and turning down indefinitely from there .I'm not signing my name to that prediction, but that possibility is far greater than people seem to recognize as the daisy chain begins to unravel.
Extra Credit - Note the collapsing populations of young and childbearing populations across broad swaths of the greatest consumer nations on earth.
East Asia (China, Japan, N/S Korea, Taiwan, Mongolia) childbearing population (blue line) and young population (green line), below.
Young, peaked in 1976 - declined by 138 million (32% decline) so far, projected to decline 259 million (61% decline) by 2100 Childbearing peaked in 2005, declined by 96 million (14% decline) so far, projected to decline 357 million (54% decline) by 2100
Europe (including Russia and Eastern Europe) childbearing population (blue line) and young population (green line), below. Young peaked in 1965, declined by 48 million (29% decline) so far, projected to decline 78 million (46% decline) by 2100. Childbearing peaked in 1989, declined by 41 million (15% decline) so far, projected to decline 105 million (39% decline) by 2100
Latin America plus Caribbean (everything in Western Hemisphere but US/Canada) childbearing population (blue line) and young population (green line), below. Young peaked in 2001, declined by 11 million (7% decline) so far, projected to decline by 74 million (44% decline) by 2100. Childbearing set to peak in 2025 and projected to decline by 87 million (33% decline) by 2100
North America (US/Canada) childbearing population (blue line) and young population (green line), below. Young peaked in 1965, zero growth since '65, projected to grow by 9 million (14% increase) by 2100. I have detailed repeatedly (linked above) why given current fertility rates, trends, and immigration patterns, this is highly unlikely and continued flat to outright declines should be the base case.Childbearing projected to grow 13 million (11% increase) by 2100. Again, this is premised on unrealistically high fertility rates and immigration...this is also highly unlikely and zero growth should be the base case.
ASIA (excluding East Asia) childbearing population (blue line) and young population (green line), below.
Young peaked in 2018, projected to decline 275 million (34% decline) by 2100. This is India, Pakistan, Vietnam, Thailand, Indonesia, etc. plus all of Western Asia (Iraq, Iran, Turkey, Saudi Arabia, etc.). Childbearing projected to peak in 2038 and decline by 240 million (20% decrease) by 2100.
Africa childbearing population (blue line) and young population (green line), below. Young projected to rise 400 million by peak, around 2090!?! Childbearing projected to grow nearly 1 billion through 2100.
Just to reiterate, this is the latest UN population data and the UN medium variant forward projections (which have been consistently too bullish on population growth...said otherwise, population growth among the young will almost certainly be significantly lower than presented here). The declines in certain regions, particularly the high consumption regions of Europe and East Asia, are already massive and are economically akin to the tide permanently receedi with collapsing demand due to collapsing births decades ago. Now this secular ebb tide in demand is receding at the worst of possible times...just as the baby-boomers step aside and require ever more of the state. The decades of interest rate cuts to incentivize decades of greater indebtedness have borrowed growth from the future to maintain the present. Of course, now we know this is borrowing growth from a high growth future that will not exist...and there is no path to outgrow the bad debt and resultant overcapacity given the low growth or no growth reality. Continuing to double down on a flawed premise is only worsening the eventual workout (stealing from a fantastical future which does not exist) and making the inevitable structural changes far more painful, and the realignment of expectations even greater.