03 November 2017

We're Getting Older, Fewer are Working and GDP Growth is Slowing: Next Decade's Economy in 4 Simple Graphs

In October, the Bureau of Labor Statistics released a report forecasting some key numbers for the next decade. You can find it here.

Here in simple graphs is the story it tells. The punchline is that the U.S. is getting old and GDP growth is slowing.

First, population growth will slow. Babies and immigrants will be coming into the country at a slower rate.

As population growth slows, the population will get older. The percentage of the workforce 55 and older will continue to rise.

People 55 and older are less likely to work than people 25 to 55. So, as the population becomes older, labor force participation rate drops.

Finally, the BLS is projecting increases in productivity. That partly offsets a drop in population growth. Nonetheless, given a smaller portion of Americans will be working, GDP growth will be up higher than last decade (a period that included the devastating Great Recession) but lower than the decade before that (and what it was most of last century).

Demographics is destiny. Baby boomers were at their peak working years 1996 to 2006 and thanks to babies and immigrants (and the babies of immigrants) population growth was robust. Over the next decade that changes and with it will come a change in economic growth.

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