Growing Slowly, Growing Old

Recent census reports have confirmed that the populations of the world’s two largest economies are growing more slowly than previously believed. This reinforces my belief that once the pandemic-driven boom is over, merchandise trade will be anything but robust.

On December 21, the U.S. Census Bureau announced that the U.S. population was 331.9 million in April 2021, a scant increase of 0.13 percent from April 2020. This was the lowest annual population growth rate since the country was founded, and it followed news that the 7.4 percent population increase between the 2010 and 2020 censuses was the slowest decennial growth rate since the Great Depression. Across the Pacific, China’s National Bureau of Statistics released the first results of China’s 2020 population census, reporting an average annual growth rate of 0.53 percent since 2010. This was the slowest annual growth rate since the People’s Republic took its first census in 1953. Worldwide, the Census Bureau reports, population growth fell below 1 percent in 2021 for the first time since it has estimated that statistic.

This matters immensely to the future of globalization. As I wrote in Outside the Box, demand for the sorts of goods that move in metal containers is likely to become steadily less important in the years ahead because the world is aging.

The median age of the global population, 23.3 years in 1985, was 31 years in 2019. According to the Central Intelligence Agency, over half the people in Japan and Germany are over age 47, and the median age in Canada, Italy, Poland, Russia, Spain, and several other countries tops 40. Thailand (39.0), the United States (38.5), and China (38.4) are not far behind. The share of Chinese residents in the 15 to 59 age group fell by a whopping 6.79 percent between 2010 and 2020, while the share of the population age 60 or over rose by almost as much.

A high median age means that a country has a large proportion of people who are beyond their peak years of goods consumption. Their spending patterns are different from those of younger families: bigger shares of their incomes go for vacation trips, restaurant meals, medical bills, and other sorts of services, and smaller shares for stuff. Older households have had years to accumulate furniture and carpets and wardrobes full of clothing, and they are not eager to acquire more of the sorts of products turned out by manufacturers’ global value chains. This is why I assert that the next phase of globalization will have more to do with trade in services and ideas and less to do with trade in goods.

Yes, there are countries whose populations are younger and are growing quickly, mainly in South Asia and Africa. But incomes in those regions are comparatively low, and it will be many years before the spending power of affluent young families in Pakistan and Kenya is large enough to make up for the sluggish growth in goods purchases among households in North America, Europe, and East Asia.

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