Demographics and The Impact on
Investment Opportunities
Nebraska Chartered Financial Analysts Society
Anthony’s
Omaha, Nebraska
Richard F. Hokenson
Hokenson & Company
May 24, 2011
Hokenson & Company is an independent consulting firm
specializing in the application of demographics to
economic, industry and financial market forecasting.
Prior to founding Hokenson & Company in May 2002,
Richard Hokenson was the Chief Economist for
Donaldson, Lufkin & Jenrette where he pioneered the
application of demographics to economic and financial
market forecasting. Following the merger with Credit
Suisse First Boston in November 2000, he was made the
Director of their Global Demographics Project where he
continued his responsibility for analysis and forecasting
of global demographic trends and their associated
economic and investment implications.
1
Agree/Disagree?
“Our teeming population is the strongest evidence our
numbers are burdensome to the world, which can hardly
support us from its natural elements. Our wants grow more
and more keen and our complaints more bitter in all mouths,
while nature fails in affording us our usual sustenance…”
The Speed of Aging: Developed Countries
Number of Years for Percent of Population 65+ to rise
from 7 to 14 percent
115
France (1865-1980)
Sw eden (1890-1975)
Australia (1938U.S. (1944-2013)
Canada (1944-2009)
Hungary (1941-1994)
Poland (1966-2013)
U.K. (1930-1975)
Spain (1947-1992)
Japan (1970-1996)
85
73
69
65
53
47
45
45
26
0
20
40
60
80
100
120
140
Speed of Aging: Developing Countries
Number of Years for Percent of Population 65+ to rise
from 7 to 14 percent
27
27
25
24
23
23
22
21
20
China (2000-2027)
Singapore (2001Chile (2000-2025)
Jamaica (2009-2033)
Sri Lanka (2004-2027)
Tunisia (2009-2032)
Thailand (2003-2025)
Brazil (2011-2032)
Colombia (2017-2037)
0
20
40
60
80
100
120
140
Demographics and
Destiny
Maximum Effective Capital Gains Tax Rate
versus Percentage of Young Taxpayers
50
36
45
34
40
Percent
35
32
30
30
25
28
20
26
15
10
24
22
0
20
19
50
19
55
19
60
19
65
19
70
19
75
19
80
19
85
19
90
19
95
20
00
20
05
20
10
20
15
20
20
5
Source: U.S. Treasury; Hokenson & Company
Tax Rate
% Young
Population Trends in
The Developed World
The Developed World
Population Change by Age Groups in Millions: 2005-2015
8
Japan and Europe
9
Japan
Population Change by Age Groups in Millions: 2005-2015
10
Japan: Old and Young as Percent of Population
40
35
Percent
30
25
Young
Old
20
15
10
5
0
1990
2000
2010
2020
2030
2040
2050
11
Western Europe
Population Change by Age Groups in Millions: 2005-2015
12
Aging in the European Union
E.U. & Candidates Aged Dependency Ratios
(population 65+ as a percent of 15 to 64)
55
50
45
40
35
30
25
20
15
2000
2005
2010
2015
EU
2020
2025
EU + Candidates
Sources: US Census Bureau, International Data Base; Hokenson & Company
2030
2035
2040
EU + Candidates ex Turkey
2045
2050
The American “Exception”
14
Total Fertility Rate for Selected Regions and
Countries: 2010
2.2
2.0
1.8
1.6
1.4
1.2
1.0
United
States
Western East
Europe Europe
Japan
Russia
China
Source: United Nations; Hokenson & Company.
15
Legal Immigration and Naturalizations
2.0
1.8
1.6
Millions
1.4
1.2
1.0
0.8
0.6
0.4
0.2
0.0
1970 1975 1980 1985 1990 1995 2000 2005 2010
Legal Inflows
Naturalizations
Total Population: US versus Eurozone
440
420
400
Millions
380
360
US
Eurozone
340
320
300
280
260
240
1990
2000
2010
2020
2030
2040
2050
17
United States : Number of Entry-Level Workers
The United States
Population Change by Age Groups in Millions: 2005-2015
19
Annualized Growth in Total and Married Couple Households
1.6
1.4
Percent
1.2
1.0
1980-1990
1990-2000
2000-2007
0.8
0.6
0.4
0.2
0.0
Total Households
Married Couple Households
Sources: U.S. Census Bureau; Hokenson & Company.
Social (In)Security?
21
United States: Population in Millions (2010)
22
United States: Population in Millions (2050)
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
Male
15
10
5
Sources: United Nations; Hokenson & Company.
Female
0
5
10
15
23
The Developing World with a focus on BRIC
Brazil
Russia
India
China
2004
2001
1998
1995
1992
1989
1986
1983
1980
1977
1974
1971
1968
1965
1962
1959
Years
Russian Federation: Life Expectancy at Birth
75
70
65
Female
Male
60
55
Russian Federation: Total Population: 1990-2050
150
145
Millions
140
135
130
125
120
115
110
1990
2000
2010
Sources: United Nations; Hokenson & Company.
2020
2030
2040
2050
Russian Federation : Number of Entry-Level Workers
26
24
Millions
22
20
18
16
14
12
10
1990
2000
2010
Sources: United Nations; Hokenson & Company.
2020
2030
2040
2050
China
Population Change by Age Groups in Millions: 2005-2015
60
50
40
30
20
10
0
-10
-20
-30
-40
0-9
10-19 20-29 30-39 40-49
50-59 60-69 70-79
80+
China: Number of Entry-Level Workers
260
240
Millions
220
200
180
160
140
1990
2000
2010
Sources: United Nations; Hokenson & Company.
2020
2030
2040
2050
The Aging Index: China versus the US
Ratio
180
160
140
120
100
80
60
40
20
0
1990
2000
2010
2020
2030
Sources: United Nations; Hokenson & Company.
USA
China
2040
2050
China: Six Brides for Seven Brothers
(Sex Ratio at Birth by Birth Order)
180
160
140
120
100
80
60
40
20
0
152
107 105 109 112
1982
Source: China 2000 Census.
121 125
160 157
132
1st births
107
105
2nd births
3rd births
4th+ births
1989
2000
India
Population Change by Age Groups in Millions: 2005-2015
35
30
25
20
15
10
5
0
-5
0-9
10-19 20-29 30-39 40-49 50-59 60-69 70-79
80+
India: Number of Entry-Level Workers
230
220
Millions
210
200
190
180
170
160
1990
2000
2010
Sources: United Nations; Hokenson & Company.
2020
2030
2040
2050
Brazil
Population Change by Age Groups in Millions: 2005-2015
7
6
5
4
3
2
1
0
-1
-2
-3
0-9
10-19 20-29 30-39 40-49 50-59 60-69 70-79
80+
Brazil - The Aging Index: 1990-2050
160
140
120
Ratio
100
80
60
40
20
0
1990
2000
2010
Sources: United Nations; Hokenson & Company.
2020
2030
2040
2050
Brazil : Number of Entry-Level Workers
37
35
Millions
33
31
29
27
25
1990
2000
2010
Sources: United Nations; Hokenson & Company.
2020
2030
2040
2050
The Era of Low Interest Rates
has only just started
or
How I learned to stop
worrying about budget
deficits
37
Yield on Long-Term Treasuries versus Smoothed
Growth in Current Dollar GDP
U.S. Current Dollar GDP
(Year-ago Change (bars) and Smoothed 10-Year Change (line))
U.S. Smoothed Growth in Current Dollar GDP
(Annual Rate of Change from same quarter 10 years ago)
U.S.: Smoothed Growth in Current Dollar GDP and
Labor Force
U.S.: Smoothed Growth in Current Dollar GDP and
Forecasted Labor Force
Yield on Long-Term Treasuries versus Historical and
Forecasted Growth in Current Dollar GDP
Important Changes in the
Financial Arrangements of
Households
U.S. Households with more MONEY than TIME
(Number of U.S. Families with Two or More Earners)
U.S. Households with more TIME than MONEY
(Number of U.S. Families with One Earner)
Suggested Readings and References
Birth and Fortune: The Impact of Numbers on Personal Welfare by Richard
Easterlin
The Great Wave: Price Revolutions and the Rhythm of History by David
Hackett Fisher
The Feminine Mystique by Betty Friedan
The Age of Discontinuity by Peter Drucker
Population and Development Review
Richard F. Hokenson
rhokenson@hokenson.biz
(609) 516-7780
47