Shrinking Populations Have Shrinking GDP

On today’s show we are taking a deep look at my forecast for the US economy over the next few years. What I’m about to share is not getting covered by the mainstream media as far as I can see. 

If we look through history, we know that economic growth and population growth are linked. It’s not that population growth alone is the cause of economic growth. It’s not enough by itself. But we know that you cannot have one without the other.

The US population is now shrinking for the first time in a century. The last time the US population shrank was in the late 1920’s when jobs evaporated during the Great Depression and people who had come to the United States for work left the country. 

In the first several months of the new administration, immigration numbers are way down. We have fertility rates at historic lows. We have workforce participation falling as baby boomers retire. 

The only way that the US population and hence the economy can grow requires immigration. The US unemployment rate remains low because the workforce is shrinking.

On Thursday we got a jobs report that surprised Wall Street and many economists. The real question in my mind is how many jobs does the economy need to generate if the population is shrinking. 

We might need to get used to low employment reports and this could represent the new normal. 

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