Impending Demographic Correction?

Everyone reading this is probably aware of the global pandemic thing that’s been going on. As it drags on, containment measures have become more and more extreme. While these measures can only really hope to flatten the curve of demand on health care resources, they are, nevertheless, almost certainly necessary for just that reason. But that’s not the point of this post. Instead, it’s the consequences of the containment measures which have moved all the way to locking down entire countries.

With so many people currently out of work due to lockdowns, shutdowns, etc., and with social and entertainment venues closed, people are almost certainly starting to get bored. There is, after all, only so much Netflix or Disney+ to watch before you either run out of content you even remotely want to watch, or just get bored with it. So what do you suppose youngish couples are doing? Well, let’s be honest, all couples are probably doing that, but it’s the “youngish” ones that matter here. The ones that are fertile.

The pandemic is definitely exacting a heavy toll on the elderly. Many nations are going to see a marked reduction in their elderly population as a result. In fact, many of the nations that are currently seeing high mortality are nations that have a demographic heavily skewed toward the elderly. That is actually bad for the medium term economic health of those nations as the number of non-productive people increases relative to the number of productive people. Indeed, elderly people also tend to buy less which puts a further drag on economic activity. Indeed, they tend not to buy many products at all, for obvious reasons. (Such as baby supplies, for instance.) An analysis strictly by the numbers would indicate that reducing the elderly population will, ultimately, be economically beneficial as fewer need to be supported by those still in the work force.

Now back to what the fertile couples are probably doing to pass some of the time. My prediction is that we will probably see an increase in births starting in the fourth quarter of 2020 and ramping up into 2021, and possibly into 2022 depending how long the current measures, or weaker versions thereof, remain in place. That means a baby boom, folks. Now, what does that mean for the economy? Well, new parents will need to buy supplies to raise their new children. That will have to have some effect. It will also go some of the way to rebalancing the demographics by introducing more young people into the mix.

So what does this all mean? Well, strictly by the numbers, the pandemic itself will remove some drain on economic activity due to elderly people who generally do not contribute substantially to the work force. That prunes some of the weight from the top-heavy demographic charts. Then, the new batch of children will fill out the bottom of the chart somewhat and will start being the drivers of the economy in a couple of decades as they move out on their own.

Will completely correct the demographic imbalance that many nations are currently experiencing? Certainly not. But it may buy some time by bolstering the next wave moving up the chart into and through their productive years. There are also other factors that are limiting birth rates which will not be corrected by a one-time baby boom, and those factors are somewhat more fundamental to problem. It should also be noted that the demographic imbalances seen by nations are not all made equal and the impact of this pandemic will vary nation by nation. I’m observing from the perspective of a reasonably prosperous western nation which is currently experiencing such a demographic imbalance. However, China, for instance, has a very different demographic skew it has to deal with due to its one child policy combined with traditional Chinese culture.

Anyway, it will be interesting to observe the effects of a potential baby boom into 2021 and beyond. Assuming it occurs, it will also be interesting to observe the demographics of the parents of those children. I wonder how much they will overlap with the cadre of the population that now has a 17 year supply of toilet paper.

Welp, that’s enough rambling.

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