Friday, September 30, 2011

More population pyramids

From the UN. I was especially interested in the continent-wide/regional aggregates, which illustrate what is summarized on page here (PDF): between now and 2050, the developed world's total dependency ratio will increase from 0.5 to 0.7 while the developing world's total dependency ratio will decrease from 0.6 to 0.5. So, for the purposes of my retirement savings, investing in "emerging markets" and investing in US corporations that do business in those countries are the obvious (but risky) ways to attempt to "escape demographics".

From another angle, if US equities really trended up for decades because so many boomers saved and are now trending down because the boomers are starting to retire, then we could see a global version of this cycle: stocks around the world booming in 2050 as billions of people in Asia and Latin America, who will have much higher living standards than their parents have today, save for retirement. However, I have no idea what extent savers in Asia and Latin America will globally diversify their portfolios.

Decades after that, there would be another bust, provided you trust the UN's projections out that far, and don't expect peak oil, nuclear annihilation, climate change, the singularity, or whatever to economically swamp the effects of demography. Addendum: The demographics behind this hypothetical post-2050 bust will be "locked in" before 2050. The lock-in process starts next decade, as Phillip Longman points out:

Indeed, the U.N. projects that by 2025, the population of children under 5, already in steep decline in most developed countries, will be falling globally -- and that's even after assuming a substantial rebound in birth rates in the developing world.
Actually, annual world births already peaked in the late 1990s. The under-5 population is still growing mostly because of declining child mortality.

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