When the coronavirus pandemic first hit in early 2020, some speculated that the closures would lead to an explosion in births in the US as couples were forced to stay home. Instead, the opposite happened: U.S. population growth decelerated in 2020 and even further last year, at the slowest pace in the nation’s 246-year history, according to data Census. Falling birth rates, high deaths from Covid-19 and less immigration have created the first year since 1937 that the country’s population has grown by less than 1 million. “The big story is that the US hit zero population growth” at around 0.1% last year, said William Frey, a veteran demographer and senior fellow at the Brookings Institution. The Covid-19 pandemic has accelerated the most important demographic trend that has shaped our species in recent decades: declining fertility rates around the world. The average family had five children in 1952; Today, the number is now under three and decreasing. In the US, while the baby boomer generation of people born between 1946 and 1964 is aging in retirement, younger generations including millennials are not reproducing rapidly, creating ” double-barreled effect” in which the percentage of women giving birth to children in the population is Frey said. The combination of fewer births and a longer life expectancy (excluding the recent impact of Covid) means the US population is getting older, which is true for most of the rest of the planet. . Even the formerly high growth regions of Latin America and Asia have slowed; Only Africa has a birth rate 2.1 times higher than the surrogacy rate. ‘Our Gray Future’ As a result, the world’s population is expected to grow from 7.7 billion in recent years to 9.7 billion in 2050 and peak at around 11 billion in 2020. 2100, according to the United Nations. Researchers at the University of Washington forecast a much earlier peak of 9.7 billion people in 2064, after which the population declines, due to more positive assumptions about declining fertility. Taimur Hyat, CEO of PGIM, the wealth management arm of Prudential Financial, said: “There are more elderly people than young people globally today. “In developed markets, you have more people over the age of 65 than under the age of 15. Even in developing countries, you will have more people over 65 than under 10 globally by 2040.” This change has major implications for the United States and all other countries. For a glimpse of our gray future, consider Italy and Japan, where the elderly have outnumbered the young and the workforce is shrinking. By 2060, nearly a quarter of Americans will be 65 or older, the number of people 85 and older will triple, and there will be half a million more centenarians, according to the US Census Bureau. According to Frey, the country could stagnate or even shrink its workforce by 2035 in scenarios with low or zero immigration. Population aging is happening faster in emerging markets than in developed countries, thanks to a history of China’s restrictive reproductive policies and rapid aging in India, according to Hyat. By 2050, at least 80% of the world’s population over the age of 65 will be in emerging markets, he said. Tackling labor shortages More and more professional investors are focusing on topics related to these trends. For example, Alan Patricof, the veteran venture capitalist who founded Apax Partners, created a fund in 2020 focused on technology for aging Americans. Even investors who don’t explicitly target the so-called silver tsunami of aging boomers see demographics as a breeze. One such company, early-stage venture capital firm TSCV, focuses on medical technology and so-called deep-tech companies working in the areas of artificial intelligence and robotics. The Silicon Valley-based company’s previous successes include seed-stage investments in Zoom and Carta. The main theme for TSCV investments is innovation to address the impending labor shortage. According to partner Spencer Greene, they have invested in startups that use AI to automate precision manufacturing of electronics and self-driving technology for long-haul trucks. Another way is to help improve efficiency in healthcare processes. “You see what happened in Japan,” Greene said. “If you look at the next 50 years, that’s where the developed world is going.” According to a pair of major reports released last month, demographic trends prompted Bank of America’s institutional research division to tweak its global holdings to create a list of 50 stocks that will attract more customers and revenue in an aging world. AMN Healthcare, for example, provides staffing and consulting to healthcare facilities in the United States, which will see increased demand as Americans age. The fact that the US population and the global population will differ greatly over the next 20 years will create strong headwinds and favorable factors for certain sectors. Chief Executive Officer, PGIM Taimur Hyat Financial names include Prudential, a life and health insurance company focused on emerging markets, and global investment banks JPMorgan Chase and UBS, according to the report. researchers. When it comes to real estate, the bank recommends Welltower, a real estate investment trust that targets healthcare real estate and has stakes in nearly 1,400 properties in the US, Canada and UK, including including nursing homes and senior housing. It also named UDR, another REIT that owns and operates more than 52,000 apartments in communities across the U.S. And it cites DR Horton, one of the largest U.S. homebuilders, as trending focuses on first-time buyers and those looking to upgrade in the West. , Southeast and South Central states. The investment bank also took the name Progyny, a provider of fertility benefits to employers. According to Bank of America, increased demand for temporary workers amid a shrinking workforce could help ASGN, a provider of professional services and temporary workers. It also named the freelancer marketplace Upwork as a beneficiary. Longer life expectancy Human lifespan is predicted to increase gradually over the coming decades; The average person born in 2020 is expected to live to 72.3 years, which could rise to 76.8 by 2050, according to German consulting firm Roland Berger. But it’s possible that breakthroughs in cancer treatments or life-extending drugs could increase life expectancy even further, according to a report on aging PGIM. According to Hyat, one of the authors of the 2016 report, demographers in the past have consistently underestimated life expectancy growth. “The fact that the US population and the global population will look so different in the next 20 years will create huge headwinds and favorable factors for certain sectors,” Hyat said. Older adults control about $8.4 trillion in spending in 2020, a number that will grow to $14 trillion over the next 10 years, according to the World Data Lab. Hyat said the spending patterns of older people are “significantly different” than that of younger people. While millennials regularly go out to restaurants and spend more on education and clothing, older people tend to spend more on nursing homes, hospitals and medicines. and much less for autos and education, he said. Those assumptions underpin PGIM’s investable ideas, he says. According to the property manager, demand for housing will increase in many places, including Florida and New England, which already have a high concentration of people aged 65 and over. Demand for new senior housing units in assisted or independent care communities is expected to grow by 850,000 units, according to research firm Senior, according to research firm Senior Housing Analytics. Housing Analytics. According to PGIM, rents in high-end residential communities tend to be stable compared to conventional apartments due to high occupancy and demand, which makes this property class relatively isolated from the economic downturn. according to PGIM. Healthcare spending is expected to hit $5 trillion next year from about $3 trillion in 2016, according to the wealth manager. People over 85 spend twice as much on health care as 65- to 84-year-olds, who spend twice as much on 45- to 64-year-olds, according to the company. “It makes sense for investors to dive into the areas of older mortality; cancer, lung disease, Alzheimer’s, pneumonia, kidney infections, Parkinson’s and focus on biotech companies. Science is coming up with targeted cures for dementia, stroke and Alzheimer’s disease,” says Hyat. Medical device manufacturers are also poised to benefit, according to the company’s Christopher Rossbach. London-based J. Stern & Co. investment, he has named companies including Becton Dickinson, Medtronic and Thermo Fisher Scientific From real estate to ‘silver technology’ A related opportunity is investing into real estate that biotech and medical startups rely on, which are often outside research centers near universities, PGIM said, would be office space in or near Boston , San Francisco, San Diego, Seattle and Raleigh-Durham, North Carolina The PGIM report says: “Competition for laboratory space is fierce, with rates of Low vacancy makes Boston one of America’s largest and most expensive markets for life sciences companies. Another area of growth is the “silver technology” category of startups that are creating apps and hardware to help seniors live more independently, maintain social connections and carers. as well as dealing with cognitive decline, says Hyat. “We see a wide range of opportunities in primary care, such as personal emergency response devices” that can detect falls and devices that remind the elderly to take medication, he said. “This trend has been accelerated by the pandemic due to the need for telehealth.” However, the aging population is not a block. According to Amlan Roy, a former demographer at Credit Suisse and State Street, who published a book titled “Demystification Unraveled” this year. “The fastest growing retirement segment in the world is age 80 and older,” Roy said in an interview. “But an 80-year-old in Japan is different from an 80-year-old in Italy or France or Germany. Understanding that is important.” Roy, who has helped create demographically relevant ETFs during his two decades on Wall Street, says that in the medium to long term, there are several broad areas of opportunity tied to aging. chemical. These include pharmaceuticals and biotechnology because diseases like Alzheimer’s and Parkinson’s plague many Americans; entertainment and luxury services for affluent older consumers, and financial services to support retirement, with a focus on women, who tend to outlive men. Rising health care and pension costs will strain governments at the same time that reduced workforce participation could lead to smaller taxes. According to Frey of the Brookings Institution, solutions include encouraging more seniors and women to enter the workforce and encouraging immigration. “The big pressure will be taking care of all these older people,” says Frey. “Long-term care, safety, medication, all of that will be important because more and more people won’t be able to take care of themselves.”
