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Demographics - They are a changin' - War Room Slides

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War Room - December 2012

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Demographics - They are a changin' - War Room Slides

  1. 1. War Room 06 Dec 2012 Demographics – They are a changin’
  2. 2. War Room •Monthly macro discussion •Using tools in context •Update on HiddenLevers Features •Your feedback welcome
  3. 3. Demographics – They are a changin’ I. Demographics – Where are we now? II. Demographics – Where are we going? III. Scenarios IV. Product Update
  4. 4. HiddenLevers DEMOGRAPHICS – WHERE ARE WE NOW?
  5. 5. USA – Current age demographics Reading population graphs Show distribution of various age groups in a population • Pyramid = expanding more young people + less old people • House = stationary young people + seniors emerging • Kite = contracting more old people + not reproducing • Wide base pyramid = youth bulge social unrest + recessions More on population pyramids
  6. 6. INDIA expanding BRAZIL contracting CHINA contracting (birth policy) Comparison – Age demographics as Destiny Middle-East Youth Bulge Evident Egypt Jordan Gaza Yemen
  7. 7. USA – current diversity demographics • Minority babies exceeded white babies in late 2011 • Recent projections show whites falling below 50% of total population by 2050.
  8. 8. US Election Demographics: 1980 vs 2012 88% 10% 2% 1980 Presidential Election Sources: UConn Roper Center Archives, 2012 Exit Polling 72% 13% 10% 5% 2012 Presidential Election White Black Hispanic Other • Brookings Institute: Minorities likely decided 2012 election • 2012 - most racially polarized election in history
  9. 9. DEMOGRAPHICS – WHERE ARE WE GOING? HiddenLevers
  10. 10. US Age Demographics - Projected US population aging rapidly, but base of pyramid should remain in tact 2010 2050
  11. 11. USA Age Demographics - International Context bottom line 1. USA in better shape than Europe + Japan 2. USA in no worse shape than China • US fertility rate at roughly replacement level of 2.1, compared to Japan at 1.36 • US non-immigrant population is aging rapidly, as in Europe + Japan (US is one generation behind them) • Majority of US population growth to 2050 expected to be via immigration (contrast to 0 immigration in Japan) • Despite aging of America, US working age population in 2050 will be around 300 million, equaling today’s total population
  12. 12. Japan: Will USA follow same pattern? healthy age demographics … not so much
  13. 13. Japan: Demographic Disaster in Slow-Motion Japan population aging into dustbin Who you callin’ dependent?
  14. 14. Japan: Demographics + GDP bottom line YOUNGER POPULATION = SUSTAINABLE GDP GROWTH I knew it was da yoots.
  15. 15. USA – Diversity Projections Virtually all future US population growth among minorities • White + Black steady. Hispanic grows most • Population growth since 1980 from immigration: 58% • Population growth until 2050 from immigration: 80% • GDP growth depends on education of immigrants No, we are not turning Japanese Fruits
  16. 16. Immigration – Busted Myths Myth 1. Mexicans coming in droves 2. Immigrants taking US jobs 3. Immigration at all-time highs Reality • Net Migration from Mexico now negative • border arrests down 50% since 2008 • Illegal immigrant population not growing • 12.5% of population, 15% of workforce • overrepresented due to aging domestics • 14.9% of population was immigrants in 1890. Currently 12.5% • Two thirds legal, one third illegal • 10.8 illegals – 40% came in legally
  17. 17. DEMOGRAPHICS - SCENARIOS HiddenLevers Baby Bust Brain Drain Beneficiary
  18. 18. Downside Scenario: Aging Baby Boomers SF Federal Reserve • Direct relationship between age demographics + P/E ratios • Baby boomers aging, withdrawing from markets • Downturn continues into 2020’s
  19. 19. Upside Scenario: Brain Drain Beneficiaries bottom line developed country realities mean immigration is a necessity for growth Smart immigration can avert Baby Bust • Merit-based immigration reform • Making it easy for world’s best + brightest to come to USA • Educating children of immigrants already here • Smart immigrants = GDP growth back above 3%
  20. 20. Guidance 1. Successful immigration form based on merit 2. GDP growth back above 3% due to immigration 3. Increased spending due to prime working-age immigrants 4. Only chance for GDP growth in developed countries Demographics – Baby Bust or Brain Drain Beneficiary? Guidance 1. Baby Boomers withdrawing assets to fund retirement 2. GDP stagnant to declining, similar to Japan 3. Retail Sales takes a hit as Boomers stop spending 5. SF Fed research projects nearly 50% drop in S&P
  21. 21. HiddenLevers – Product Update • Interactive Lead Generation App • Integrations: - Schwab Portfolio Center - Fortigent • UI: Buttons + Sorting of Advanced Stats Coming soon: 1. PDF-friendly versions of all HiddenLevers pages 2. Annual feedback session - what do you want to see?

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