When the coronavirus pandemic first hit in early 2020, some predicted that the shutdown would trigger an American baby boom as couples are forced to stay home. The opposite happened instead: US population growth slowed in 2020 and even more last year, to the slowest pace in the nation’s 246-year history, according to census data. Low birth rates, high deaths from Covid-19, and low immigration led to the first year since 1937 that the country’s population increased by less than a million people. “The big story is that the United States is hitting essentially zero population growth” of about 0.1% last year, William Fry, a veteran demographic expert and senior fellow at the Brookings Institution, said in an interview. The Covid-19 pandemic has accelerated what has been the most important demographic trend shaping our species in recent decades: declining fertility rates around the world. The average family had five children in 1952; Today, the number is now less than three and declining. In the United States, as baby boomers advance from 1946 to 1964 into retirement age, younger generations including millennials are not multiplying at the same speed, creating a “double-barreled effect” where the proportion of the population of women who are carrying children is shrinking, Frey said. . The combination of fewer children and longer life (except for the recent impact of Covid) means the US population is getting older, as is most of the rest of the planet. Even the previously high-growth regions of Latin America and Asia have slowed; Only Africa has fertility rates above 2.1 births per mother replaced. Our “gray future” The result is that the world’s population is expected to rise from 7.7 billion in recent years to 9.7 billion by 2050 and peak at around 11 billion in 2100, according to the United Nations. Researchers at the University of Washington have predicted an early peak of 9.7 billion people by 2064, after which the population will decline, thanks to more aggressive assumptions about reduced fertility. “Globally older people now outnumber young people,” said Timur Hayat, chief operating officer of PGIM, the asset management arm of Prudential Financial. “In developed markets, you have more people over 65 than under 15. Even including the developing world, you’re going to have more people over 65 than less than 10 globally. by 2040.” This shift has enormous implications for the United States and all other countries. For a look at our gray future, consider Italy and Japan, where the elderly are already outnumbering the young and the workforce is in decline. By 2060, one in four Americans will be 65 or older, the number of those 85 or older will triple, and there will be half a million more centenarians, according to the US Census Bureau. The country could experience stagnation or even a decline in the workforce by 2035 under scenarios of low or no immigration, according to Frey. Population aging is happening faster in emerging markets than in the developed world, thanks to the history of China’s restrictive reproductive policies and India’s rapid aging, according to Hayat. By 2050, he said, at least 80% of the world’s population over the age of 65 will be in emerging markets. Addressing labor shortages A growing subset of professional investors are focusing on topics related to these trends. For example, Alan Patrikov, the veteran venture capitalist who founded Apax Partners, created a fund in 2020 focused on technology for elderly Americans. Even investors who don’t explicitly target the so-called silver tsunami for baby boomers cite demographics as a tailwind. One such company, early-stage venture capital firm TSCV, focuses on health tech and so-called deep tech firms working in artificial intelligence and robotics. The Silicon Valley-based company’s previous results include seed-stage investments in Zoom and Carta. A major theme of TSCV investments is innovations to address the impending labor shortage. They’ve invested in startups that use artificial intelligence to automate precision manufacturing of electronics and long-range truck self-driving technology, according to partner Spencer Greene. Another is to help improve efficiency in healthcare operations. “You see what happened in Japan,” Green said. “If you look at the next 50 years, that’s where the developed world is headed.” Demographic trends have prompted Bank of America’s Institutional Research division to form its global equity teams to create a list of 50 stocks that will attract more clients and revenue in an aging world, according to two massive reports published last month. For example, AMN Healthcare provides staff and consultancy for healthcare facilities in the United States, which will see increased demand as Americans age. The fact that the US population and the world population will look different 20 years from now will create significant headwinds and tailwind factors for certain sectors. According to the researchers, major names for the operations include PGIM Taimur Hyat Financial, Prudential Corporation, a life and health insurance company focused on emerging markets, and global investment banks JPMorgan Chase and UBS. When it comes to real estate, the bank recommended Welltower, a real estate investment trust targeting healthcare properties with stakes in nearly 1,400 properties in the US, Canada and the UK, including nursing homes and seniors’ residences. Also called UDR, another REIT that owns and operates more than 52,000 apartments in communities across the United States cited DR Horton, one of the largest homebuilders in the United States, which tends to focus on first-time buyers and those looking to upgrade in the West. Southeast and South Central. The investment bank has also launched Progyny, a provider of fertility benefits to employers. Bank of America said a growing need for temporary workers amid a shrinking workforce could help ASGN, a company that provides temporary employment and professional services. He also named the freelance marketplace Upwork as a beneficiary. Longer lifespan Gradual increases in human lifespan are expected in the coming decades; The average person born in 2020 is expected to live 72.3 years, which could rise to 76.8 by 2050, according to German consultancy Roland Berger. But it’s possible that breakthroughs in cancer treatments or longevity drugs could increase life expectancy, according to the PGIM Aging Report. If anything, demographers in the past have consistently underestimated life span growth, according to Hayat, one of the authors of the 2016 report. “The fact that the US population and the world population will look different 20 years from now will create significant headwinds and factors tailwinds for certain sectors. Older people controlled about $8.4 trillion in spending in 2020, a number that will balloon to $14 trillion over the next 10 years, according to the Global Data Lab. Hayat said the spending patterns of the elderly are “totally different” from those of the young. He said that while millennials frequent restaurants and spend more on education and clothing, older adults tend to spend more on nursing homes, hospitals and medicine and much less on cars and education. He said these assumptions support PGIM’s investable ideas. Demand for housing will rise in places, including Florida and New England, where there is already a concentration of those 65 and older, according to the asset manager. For the older cohorts, the need for new housing units for seniors in independent or subsidized care communities is expected to increase by 850,000 units, according to research firm Senior Housing Analytics. Rents in upper residential communities tend to stabilize compared to regular apartments due to higher occupancy rates and demand, leaving the asset class relatively insulated from the economic downturn, according to PGIM. Healthcare spending was expected to reach $5 trillion by next year from about $3 trillion in 2016, according to the asset manager. Those over the age of 85 spend twice as much on health care than those aged 65 to 84, who in turn spend twice as much as the group between the ages of 45 and 64, according to the company. “It makes sense for investors to delve deeper into the areas that cause death to older adults; so cancer, lung disease, Alzheimer’s, pneumonia, kidney infections, Parkinson’s disease and focus on biotech companies creating highly targeted treatments for dementia, stroke and Alzheimer’s disease.” Medical device manufacturers are also expected to benefit, according to Christopher Rosbach of London-based investment firm J Stern & Co. From real estate to “silver tech” there is a relevant opportunity to invest in the real estate that biotech startups and medical firms rely on, which are usually outside research centers near universities, PGIM said. That would be office space in or near Boston, San Francisco, San Diego, Seattle and Raleigh-Durham, North Carolina. According to a PGIM report, “Competition for lab space is fierce, with low vacancy rates, helping make Boston one of the largest and most expensive US markets for life sciences companies.” Another area of growth, Hayat said, is the “silver tech” category for startups creating apps and devices to help seniors live more independently, maintain social connections and caregivers, and deal with cognitive decline. “We see a range of opportunities in primary care such as personal emergency response” that can detect falls and devices that remind older adults to take pills, he said. “This trend has been accelerated by the pandemic due to the need for telehealth.” However, population aging is not monolithic. Age is a feature of several, including education levels, geography and wealth, according to Alman Roy, a former demographic researcher at Credit Suisse and State Street who published a book this year called “Demographics Unraveled.” “The fastest growing retirement segment in the world is over 80,” Roy said in an interview. “But an 80-year-old in Japan is different from an 80-year-old in Italy, France or Germany. Understanding this is important.” Roy, who helped create demographic ETFs during his two decades on Wall Street, said that in the medium and long term, there are many broad areas of opportunity associated with aging. These include drugs and biotechnology as diseases including Alzheimer’s disease and Parkinson’s disease that affect Americans the most. Leisure and welfare services that cater to wealthy, elderly consumers, and financial services to help fund retirement, with an emphasis on women, who tend to outgrow men. Increased healthcare and pension costs will strain governments at the same time that lower labor force participation may lower tax rolls. Solutions include encouraging more workforce participation by older adults and women and stimulating immigration, according to the Frey of the Brookings Institution. “It’s going to be a huge stress to take care of all these seniors,” Frey said. “Long-term care, safety, medication, it’s all going to be important because more and more people won’t be able to take care of themselves.”
#world #aging #rapid #pace #ways #invest #gray #future