Economic Impacts of Slowing Global and United States Population Growth

Investors need to consider the meaning of changing trends in U.S. and global population growth. The issue in changing demographic and population growth trends deserves extra consideration because the trend is completely new to the United States and the global economy. Significant risk and opportunity exists around the issue because the potential exists that our economic assumptions and calculations to some extent factor in growth as a baseline factor when in fact this may turn out not to be the case.

What are some the significant component risks? A few that standout in my mind include:

Our economy often rides at least to some extent on the idea of continually needing more of everything. In fact, this is so deeply ingrained that even given a choice, we tend to build in a level of obsolesence. In a global economy where the population growth is slowing toward zero, fixed and potentially eventually in decline, the potential exists that succeeding generations will determine to build for generations rather than for years. The effect should this occur will have far reaching effects on many of basic infrastructure assumptions.
Large segments of the economy will become focused on break fix instead of new build. This is especially true in real estate, construction, and major capital equipment.
Growth and wealth building will focus on additional capacity and return magnification around the individual. In short, each generation's ability to build wealth and quality of living will focus on the individual. Unless everyone grows wealthier everyone is playing a zero sum game. While individuals may have large wealth, society must focus on creating wealth for all or the system will break.
Global attention will have to shift to population maintenance and controlled growth. Otherwise, we may have sown the seeds of our extinction. In some ways the entire population problem may be more complicated than ever.

Opportunity in the scenario facing the global economy will be on game changing technology, processes, and knowledge. Game changers may in fact have relatively minor impact. For example, a new robotic technique that allowed a farmer to till 10% more land would free millions of human resources to pursue other wealth and quality of living creating activities for the global economy. Or, some basic change to city planning to increase density and livability would fall in the same category. Interestingly, some game changers will be the logical consumption and understanding of how the new paradigm effects investment. For example, building a housing structure to provide the very best living for 200 years could be an excellent use of funds since no new building for those persons or their offspring need be considered.

While the global population is expected to reach approximately 3 trillion more than today, the argument must be considered that the slowing growth trend may effect economic and financial results beginning even now.