US population growth is the lowest its been since 1918. Here's why that's terrible news for its economy.
- The US population barely grew in 2019, amounting to a 0.48% trickle unseen in a century. It carries major economic implications for the nation's future.
- Major factors of the past year's slowdown included fewer US births, a reduced number of immigrants, and Americans living longer, but it reflects trends that stretched back the last decade.
- The slowdown in population growth is playing a key role in sober assessments of 2% US economic growth throughout the 2020s.
- It could mean fewer, prime-age workers in the economy paying taxes and supporting a bevy of government programs.
- Visit Business Insider's homepage for more stories.
America's population grew only 0.48% in 2019, according to new figures released at the end of December. It's a trickle unseen since the end of World War I in 1918 - and the trend carries major economic implications for the nation's long-term future. By comparison, South Africa's population is currently growing by around 1.4%.
Three key elements in the population slowdown over the last year included fewer US births, a reduced number of new immigrants, and the overall graying of Americans. The birth rate and immigration have historically driven the nation's changing population dynamics.
The census data capped 10 years of sluggish US population growth. The 2010s may enter the record books as the slowest decade in population growth since the first Census in 1790, according to the Brookings Institution. And low fertility and an increase in deaths are projected to continue into the 2020s.
The prospect of demographic stagnation is playing a critical role in projections of slower US economic growth over the next decade, given smaller increases in the numbers of working-age Americans and as baby boomers continue retiring. Going forward, a ballooning number of retirees would rely on a shrinking number of workers to power the economy.
As a result, most analysts expect the economy to grow 2% annually instead of the 3% common in the half-century before the Great Recession.
Having fewer workers would also mean a drop in the amount of payroll taxes the government collects, severely straining tight finances for programs used to support older Americans like Social Security and Medicare.
A report released last year from the Economic Innovation Group - a tech-funded think-tank - showed that 41% of US counties are experiencing population declines similar to Japan's. It said the demographic losses would "reverberate" through housing markets and municipal finances, prompting a drop in home values and local tax revenue that helps pay for education and infrastructure.
The study projected that by 2037, two-thirds of counties will have fewer working-age adults compared to 1997, despite the US population bumping upward year-after-year.
That trend threatens to throw rural areas into a cycle of decline - and make it harder for young people to stick around instead of heading elsewhere for schooling or work, further undercutting the economic futures of those communities.
But the group engineered a possible solution harnessing the natural pull of immigration. It proposed a "heartland visa" program that would encourage immigrants to settle in struggling communities hollowed out by workers seeking better opportunities in larger, thriving cities.
More immigration could help stem slow population growth
US president Trump's restrictive immigration policies are likely linked to a slowdown of new immigrants entering the United States. Last year, the net increase of immigrants dropped to 200,000 people, a 70% decline from the previous year.
That doesn't bode well in the short-term for the working-age population, since immigration is expected to drive most of the increase over the next 15 years to at least 2035.
Unlike the birth and death rates, though, immigration is an issue that lawmakers can do something to encourage.
"The wild card is immigration. The reason we don't have a declining labor rate is because we've had strong immigration rates over the last three decades," says William Frey, a senior fellow at the Brookings Institution who studies demographics. "That's a factor we can do something about."
They tend to arrive at working ages, meaning they can pay taxes that help keep programs like Social Security alive. And research has shown that they start companies at double the rate of native-born Americans.
Receive a daily update on your cellphone with all our latest news: click here.
Also from Business Insider South Africa:
- The biggest South African business scandals over the past decade
- These are the top 10 academic schools in South Africa right now - with fees starting from R33,000 a year
- We were weirded out by Sunlight's new bubble bath - but as expected it packed a monster punch
- Thousands of Australians are calling for their prime minister's resignation
- The US reportedly sent secret messages to Iran via Swiss intermediaries, urging it not to provoke Trump
- Meghan Markle has reportedly signed a voice-over deal with Disney