The world’s population is expected to stop growing by the end of this century, according to recent data from the United Nations. In fact, some demographers dispute that the world’s population will keep growing even that long. And once the world’s population starts to decline, the decline could be very rapid.
It is important that demographers accurately predict population decline and prepare for the huge societal and economic implications it will bring. We are charting new territory. Never before in human history have there been more grandparents than grandchildren: There are now more people aged 65 and older than there are under age five.
The most recent report of the Social Security trustees suggested that the trust fund reserves will be depleted in 2034. This is a dire warning. The only problem is that it’s wrong: It’s far too optimistic.
The same story goes for the Congressional Budget Office’s long-run budget projections. They say that debt-to-GDP will rise to 144% by 2050. That’s bad. But it’s not bad enough to accurately reflect reality.
Indeed, virtually every forecasting body in America, from Goldman Sachs to the Social Security Trustees, is wrong. Painfully wrong. Those whose job is to anticipate the future are engaged in a colossal project of collective negligence.
Stone’s basic contention is that the American Census Bureau simply fails to use the most up-to-date data, despite it being widely available:
In 2017 and 2018, the Census’ projection overestimated births by 317,000 babies, underestimated deaths by 230,000 deaths, and overestimated net migration by 67,000. In other words, for every component of population change, the Census projections were too optimistic.
According to Stone, if you correct the forecasting errors but use the same long-run assumptions about deaths, births and migration, there will be 34 million fewer Americans in 2060. However, if the Census Bureau is also wrong about long term trends, that number increases even further.
Stone contends that it is possible that the American population could be in decline by the middle of the century, and that America’s public and private institutions are certainly not prepared for so sharp a demographic change.
Long term population trends are notoriously hard to predict. For instance, Stone states:
Nobody expected that fertility would fall so abruptly even as mortality would rise so sharply, and at a time when immigration rates are relatively low as well.
Demographic tremors are already playing out: many retirees are finding that there just aren’t people around to buy the homes they planned to use as savings vehicles for retirement.
Eventually, these tremors will turn into an earthquake as more and more municipalities, counties, and even states face irreversible demographic decline, leading to inability to pay for long-term liabilities, and in many cases even current services.
By the time the problem becomes large enough to seriously impact the Federal budget, sometime in the 2030s or 2040s, it will be too late to turn things around.
Many people seem to still be under the mistaken impression that the world’s population will continue to grow indefinitely. Given continuing low fertility rates, this simply isn’t true for the vast majority of the world’s countries, and we need to prepare for the change.