Friday, March 16, 2012
Global Trends and Demographics - US v World
According to several published reports 50% of the world is urbanized.
This means that 3.5 billion people live in cities or near cities in suburban neighborhoods. The other 3.5 billion live in rural areas. Another interesting trend is the speed of aging in the developing countries: China for example will see its
65+ population go from 7% in 2000 to 14% by 2027.
And developed countries such as the US will see 14% of its total population over 65+ by next year! That's a whopping 43,789,335 people OVER 65 according to the US Commerce Department's total US population of 312,780,968.
How will this over 65 group affect social security?
There are two theories on this:
#1. "Social Security Going Broke" and #2. "Social Security Not Going Broke".
When Social Security was sat up in 1935, the US had just come out of the Great Depression and as the war years grounded to a halt more and more people were working in well paid, long term, pensionable jobs.
Social security was in good shape with about 40 workers to every retiree (see graph) but now in the second decade of the 2000s due to the baby boomers and lower employment levels, that ratio is a disturbing 2.9 to 1 and will go lower over the next decade ASSUMING UNEMPLOYMENT DOES NOT EXPLODE!
So the group who believe Soc-Sec is broke are primarily in the world of finance and hope by scaring the population who are working NOW, they will force them to abandon any hopes of access to Soc-Sec when they retire and plough their retirement money into stocks and bonds.
The other group, unions and optimists who believe Soc-Sec can brave the financial storms ahead lobby for a more proactive approach by government on keeping a so-called "lock-box" on the Soc-Sec trust fund.
Whatever side you believe in, the facts are this: LESS PEOPLE are working and MORE PEOPLE are retiring!
Mathematics doesn't lie!
The poster left is from the late-thirties when the United States was rebuilding its industrial base, coming out of the Great Depression and hadn't entered the war yet.
Since then US manufacturing jobs have fled to Mexico, been outsourced all around the world and service jobs make up a substanial percentage of employment in 2012.
Added to this is the fact that 73% of US GDP is made up of CONSUMPTION and the picture gets clearer: we are a nation of consumers, aging at an increasing rate with employment slowing and economic growth stagnant.
HDD believes that the official government statistics in unemployment are WAY OFF since they do not take into account the people who have RUN OUT OF UNEMPLOYMENT INSURANCE and have given up searching for a job!
Most of the research on the state of Soc-Sec presently and in the future assumes that unemployment will decrease and NOT INCREASE.
HDD thinks that unemployment will increase to around 20% over the next five years.