1 in 5 of world population will be in New Old 55+ generation

Economic growth

SHARE THIS STORY

Segments Oct15An amazing development is taking place in the world today.  For the first time in human history, more people are joining the 55+ age group than the 25 – 54 age group:

  • 600m people will be joining the New Old 55+ cohort between now and 2030, taking their numbers to 1.8bn
  • This is twice the number joining the Wealth Creator 25 – 54 cohort, which will total 3.3bn in 2030
  • It means there will have been a 6-fold increase in the New Old cohort versus the 190m in 1950

This has never happened before, for the simple reason that life expectancy has never been as high as it is today.

Someone aged 65 in the developed world has a life expectancy of 20 years today.  Someone in the emerging economies can expect to live another 15 years.  Yet just a century ago, TOTAL life expectancy was just 46 years in the developed world and only 24 years in the emerging economies.

This has critical implications for the global economy, and therefore for companies and investors.  As I noted in the Financial Times last year:

Consumption is 60% of Western GDP. And so a growing army of pensioners creates obvious headwinds for growth. They lack the income to stimulate demand themselves, while the spending power of the younger generation is reduced by the need to help pay for their parents’ pensions.

“It is wishful thinking to imagine that Europe’s demographic deficit, created by 50 years of declining birth rates and rising life expectancy, can now be resolved by negative interest rates or the electronic printing of banknotes.”

We are in a trap of our own making.  Policymakers have been too scared to debate the implications of longer life expectancy with the electorate.  Yet more than 1 in 5 of the world’s population will be in the lower-spending and lower-income New Old 55+ age group within 15 years.  There were only 1 in 10 in the group just 15 years ago, in 2000.

The world’s previous demographic dividend, caused by the arrival of the BabyBoomers in the peak-spending and peak-income Wealth Creator 25-54 age group, is now becoming a demographic deficit.  Yet pension age is still not properly indexed to life expectancy.  Pension age today is lower than when pensions were first introduced a century ago.

We have long passed the point of no return in terms of the impact on demand patterns and economic growth.  If women were suddenly to return to having the same number of babies as in 1950, it would still take 25 years for these babies to grow up and join the wealth creating cohort.   Companies and investors simply must revisit their stratgegies to take account of how these changes will impact them.

The collapse of commodity prices, China’s change of economic direction with its New Normal policies, and the likely arrival of deflation are just the early signs of the generational paradigm shift now underway.

Our new Study, How to survive and prosper in today’s chaotic petrochemical markets: 5 Critical Questions every company and investor needs to answer, is now about to be launched.  It will provide a road-map through today’s challenges, and a clear vision of the new opportunities now emerging for future growth and profit.

Please click here to download a copy of the Prospectus.

PREVIOUS POST

China has burst the commodities superbubble

30/09/2015

China’s New Normal policies are taking global commodity markets in a new d...

Learn more
NEXT POST

Markets worry real world issues may trump monetary stimulus

05/10/2015

Something has clearly changed in global financial markets in recent weeks.  Not...

Learn more
More posts
Markets face major paradigm shifts as recession approaches
06/10/2019

Major paradigm shifts are occurring in the global economy, as I describe in a new analysis for ICIS ...

Read
No Deal Brexit still a likely option if opposition parties fail to support a new referendum
15/09/2019

Canada’s normally pro-UK ‘Globe and Mail’ summed up the prevailing external view of Brexit las...

Read
UK, EU27 and EEA businesses need to start planning for a No Deal Brexit on 31 October
28/07/2019

New UK premier, Boris Johnson, said last week that the UK must leave the EU by 31 October, “do or ...

Read
London house prices edge closer to a tumble
21/07/2019

After the excitement of Wimbledon tennis and a cricket World Cup final, Londoners were back to their...

Read
G7 births hit new record low, below Depression level in 1933
14/07/2019

If a country doesn’t have any babies, then in time it won’t have an economy. But that...

Read
From subprime to stimulus…and now social division
06/07/2019

The blog has now been running for 12 years since the first post was written from Thailand at the end...

Read
Resilience amidst headwinds is key for H2
30/06/2019

Resilience is set to become the key issue as we look forward to H2, as I note in a new analysis for ...

Read
Perennials set to defeat Fed’s attempt to maintain the stock market rally as deflation looms
23/06/2019

Never let reality get in the way of a good theory. That’s been the policy of western central b...

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