US becomes ‘The Snail Economy’ as its population ages

Economic growth

SHARE THIS STORY

US GDP Oct13There comes a moment in a debate when the argument is clearly won, and discussion moves on to practical issues of implementation.  We can see that process in action this week, following a major analysis in Barrons, the leading US investment magazine.  Titled ‘The Snail Economy’, its core argument is summed up in the chart above, which mirrors almost exactly the analysis of Boom, Gloom and the New Normal.  Thus as its cover page suggests:

Barrons Oct13

“Over the next 20 years, the US economy is likely to grow only 2% a year.  That’s down from 3% or better since World War 2.  Blame it on an aging population and sluggish productivity growth.  Bad news for stocks and social harmony”

The article itself goes on to demonstrate the rationale for this core statement in detail:

“The U.S. working-age population (Americans from 18 to 64 years of age) is projected to grow only 0.36% during the current decade and then limp along at 0.18% from 2020 to 2030. That’s well below the 1.81% rate that prevailed during the 1970s when baby boomers and women were streaming into the workforce. What was a demographic dividend now acts in reverse as boomers start to retire in large numbers, sharply raising their financial dependence on workers whose taxes fund their costly entitlement programs.”

And it then adds that of course this is not just a US phenomenon:

“The U.S. dilemma becomes more challenging because the whole world is aging, putting downward pressure on global growth. Most famously, Japan’s retirement-age population has risen steadily; it is expected to hit 26% of the total population by 2015 and top 29% by 2025, according to the United Nations’ Population Division. The aging of Japan has coincided with a scarcely growing economy since the 1990s.

Thus this week marks the moment when important business media finally began to give up on the idea that stimulus packages will somehow return the economy to previous growth levels.

The evidence for this is not new.  But human beings don’t like change.  And so until recently, most instead chose to share the wishful thinking of policymakers, that everything would soon be back to ‘normal’.

Today, however, the balance is shifting.  Not only has 5 years of stimulus completely failed to produce the promised results.  But also the survival instinct is leading people to look around for new answers.  Nobody likes to feel they are trapped in an increasingly difficult market with no apparent means of escape.

PREVIOUS POST

A little bit of China stimulus goes a long way in housing

30/10/2013

It was only a “mini-stimulus” that was delivered by China’s ne...

Learn more
NEXT POST

Syngenta aims to gow more food with less fertiliser, pesticides

02/11/2013

One of the key chapters in ‘Boom, Gloom and the New Normal’ is titl...

Learn more
More posts
The world has wasted 3 months – there is little time now left to avoid a Covid-19 catastrophe
05/04/2020

It is now 3 months since China’s state television broadcast the first news of the Wuhan virus,...

Read
A new recession era to emerge
22/03/2020

Contingency planning has become mission-critical. The longer the coronavirus pandemic continues, the...

Read
Chain’s smartphone and auto sales tumble as coronavirus hits demand
08/03/2020

China is the world’s largest market for smartphones and autos – responsible for c30% of ...

Read
China’s lockdown makes global debt crisis now almost certain
23/02/2020

Beijing has a population of 21.5 million, but you wouldn’t know it from this BBC video from la...

Read
Financial markets head for (another) train crash as coronavirus starts to impact
17/02/2020

China’s industrial heartland of Hubei (pop 59m) and its capital Wuhan (pop 11m) have now been ...

Read
Coronavirus disruptions make global recession almost certain
11/02/2020

Last month, our Hong Kong-based pH Report colleague, Daniël de Blocq van Scheltinga, warned of the ...

Read
Your A to Z Guide to the Brexit trade negotiations
02/02/2020

A. Article 50 of the Lisbon Treaty set out the rules for leaving the European Union. As with most ne...

Read
Contingency planning is essential in 2020 as “synchronised slowdown” continues
12/01/2020

The IMF has now confirmed that the world economy has moved into the synchronised slowdown that I for...

Read

Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more

Analytics

Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more