The Most Important Numbers of the Next Half-Century

In 1991, former MIT dean Lester Thurow wrote: "If one looks at the last 20 years, Japan would have to be considered the betting favorite to win the economy honors of owning the 21st century."

It hasn't, and it likely won't. But 20 years ago, the view was nearly universal. Japan's economy was breathtaking -- rapid growth, innovation, and efficiency like no one had seen. From 1960 to 1990, real per-capital GDP grew by nearly 6%, double the rate of America's.

But then it all stopped. Japan's economy isn't the scene of decline some depict it as, but its growth slowed to a trickle at best.

What happened?

You can write volumes of books analyzing Japan's decline (and some have), but one of the biggest contributors to its stagnation is simple: It got old.

Decades in the making
The story begins, as so many about the modern day do, with World War II. Japan's toll in the world war was among the highest as a percentage of its population. Some estimate 4.4% of the Japanese population died in the war (the figure is 0.3% for the United States).

Demographically, two things resulted from that population shock that would shape the country's economic fate for the next half-century. Like America, Japan underwent a "baby boom" immediately after the war as returning soldiers married and families were rebuilt. More than 8 million Japanese babies were born from 1947 to 1949 -- a staggering sum given a population of around 70 million at the time.

Yet post-war devastation couldn't be ignored. Its major cities largely reduced to rubble, Japan didn't have the infrastructure necessary to support its existing population, let alone growth -- a problem amplified by the country's relative lack of natural resources. Tokyo-based journalist Eamonn Fingleton explains what happened next:

[In] the terrible winter of 1945-6 ... newly bereft of their empire, the Japanese nearly starved to death. With overseas expansion no longer an option, Japanese leaders determined as a top priority to cut the birthrate. Thereafter a culture of small families set in that has continued to the present day.

This created an extreme bulge in the country's demographics: a spike in population immediately after the war followed by decades of low birthrates.

As Japan entered the 1970s and 1980s, the baby boom generation -- called "dankai," or the "massive group" -- hit their peak earning and spending years. They bought cars, built houses and took vacations, helping to fuel the country's economic boom (which turned into an epic bubble). Observers like Thurow ostensibly extrapolated that growth and became dewy-eyed.

But as the 1990s rolled around Japan's dankai not only waved goodbye to their prime spending years, they crept into retirement. Consumption growth dropped and the need for assistance rose. Meanwhile, the small-family culture endured. Japan's birth rate per 1,000 people has averaged 12.4 per year since 1960, compared with 16 per year in the U.S, according to the United Nations. Combine the two trends, and Japan's aging population has created a demographic brick wall that has kept economic growth low for the last two decades, and will likely worsen for more to come. Adult diapers outsold baby diapers in Japan last year for the first time ever. There's your sign, as they say.

Lesson learned: Keep an eye on demographics. Age distribution is hardly the end-all driver of future growth, but it plays an important role. You could do worse than gauging a country's economic fate simply by looking at its demographic projections.

The ovarian verdict
Dig through international demographic projections, and one thing becomes shockingly clear: The United States is in a much better position than nearly all other major economies.

There are two key numbers to watch when looking at demographics: the percentage of the population that's of working age (15-64), and the percent likely to be in retirement (over 65). The U.S. Census Bureau has great demographic data for nearly every country in the world, with projections through the year 2050. Here's how things look today:


  U.S. U.K. China France Germany Italy Spain Russia Japan
Percent of Population -- Working Age (15-64)










Percent of Population -- 65+










Source: Census Bureau.

Predictable. China has a young population teaming with potential workers. The U.S. is slightly behind. Old-world Europe is a bit grayer. Japan is the wrinkliest of the bunch.

But where things get really interesting are projections of the year 2050:


  U.S. UK China France Germany Italy Spain Russia Japan
Percent of Population -- Working Age (15-64)










Percent of Population -- 65+










Source: Census Bureau.

Everything changes. Though all countries age, within four decades the U.S. will likely have one of the lowest percentages of elderly citizens, and one of the highest rates of working-age bodies among large economies. China, meanwhile, will see its working-age population plunge and its elderly ranks soar -- an echo of its one-child policy. Europe falls deeper into age-based stagnation. Alas, Japan becomes the global equivalent of Boca Raton. (Note: I excluded India from the list because it has a low life expectancy, which skews the comparison.)

And it's not just the percentages that change. The U.S. is projected to grow its working-age population by 47 million between 2012 and 2050. Amazingly, China's population of working-age citizens is expected to decline by more than 200 million during that time:

Sources: Census Bureau.

For perspective, the U.S. is on track to grow its working-age population by the equivalent of six New York cities between now and 2050. China is on track to lose the equivalent of three United Kingdoms.

Those, folks, may be the most important numbers of the next half-century.

The next leg
Look around at commentary today. It's a predictable dose of tombstone preparation for the U.S. economy and trumpets hailing the arrival of China as the world's new superpower. Will we one day look back on these assumptions with the same amusement we now give Thurow's prediction for Japan? I wouldn't doubt it. "The trick is growing up without growing old," baseball great Casey Stengel once quipped. That's true for countries, too.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Follow him on Twitter @TMFHousel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (35) | Recommend This Article (127)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 22, 2012, at 3:40 PM, NCTad wrote:

    Insightful and thought provoking as usual! Thanks so much!!

  • Report this Comment On June 22, 2012, at 5:25 PM, mdk0611 wrote:

    Interesting report. And doesn't Japan have the most restrictive immigration and naturalization process of all the countries you listed?

  • Report this Comment On June 22, 2012, at 6:21 PM, TMFBlacknGold wrote:

    Two interesting reads on the subject:

    1) The Miracle

    2) The Post American World

  • Report this Comment On June 22, 2012, at 8:32 PM, VieuxCarre wrote:

    Japan compounds its problems by holding on to its racist and xenophobic views of foreigners, limiting the ameliorating effect of immigration. Too bad, Japan has a lot to offer.

  • Report this Comment On June 22, 2012, at 8:35 PM, TMFDarwood11 wrote:

    Well, in 2050 I'll be 104. I'll check back then and let you know how it turned out!

    Just kidding!

    I suppose it's useful to ruminate about the possible future of China in 38 years. However, that's a long, long way off. As we know, a lot can happen in 38 years. Less than 20 years ago former Pres. Clinton was crowing about the budget surplus and the age of plenty.

    I do get it. A lot can happen in 38 years. A lot of Americans will be dead, and so will a lot of Chinese, and there will be more aged. Nor does it make a lot of sense to make a straight line projection using the Chinese Communist Party Line.

    The most interesting information in the article is the more or less continual increase in aged on much of the planet, as a percentage of the population. Perhaps that bodes poorly for Apple, unless they can come up with geriatric-centric products.

    For the immediate future, the question I keep asking is "what will be the outcome of 76 million boomers retiring, the majority of whom will do so in the next 13 years?" Who is going to fill all of those job positions? What impact will that have on the U.S. economy? So far, all I get are vague generalities.

  • Report this Comment On June 22, 2012, at 9:29 PM, mingvest64 wrote:

    @Darwood11 two of the other comments hinted at the answer to your question. It will be immigrants who fill the vacant job positions, assuming that U.S. continues it's immigration policies.

    An increasing working population is a boon to growth.

  • Report this Comment On June 22, 2012, at 9:31 PM, mingvest64 wrote:


    Thanks again for an enlightening article. You are one of the best writers in the MF realm IMHO.

  • Report this Comment On June 22, 2012, at 10:32 PM, Sunny7039 wrote:

    As I was reading this, I was expecting to get to a much better "punch line." I thought the numbers would be more in our favor. These are not good at all.

    The percentages are percentages of a MUCH larger base in the case of China. That, as anyone with a smattering of economics knows, will matter.

    But there are bigger problems with this article. With respect to Japan, it mostly talks about domestic consumption of domestically produced goods. That is SO yesterday. China's market isn't China. Will it be? Will it need to be, to sustain growth? These are the issues.

    Here are some more facts: The Chinese -- young and hardworking, or old and retired -- are "lower maintenance" than we are. That will matter as well, though I'd be reluctant to say how. In other words, I don't claim it's an unmitigated positive thing for them. I don't know. What is evident is that in a world of dwindling resources, it will make a difference. People who expect technological advances to save us seem to think that technology doesn't need resources to function. Some of it needs raw materials that are even less plentiful than oil and cost a lot to mine.

    The most important number will be the number of well-educated people participating in the workforce -- both as an absolute number, and as a percentage of the total population. Likewise, the number of highly skilled/artisan level workers. This is one reason Germany has a trade surplus despite having to import its oil. It's also a reason France's trade deficit is 1/3 lower than the U.S.'s, relative to total GDP, despite having to import its oil.

    It seems to me that the U.S. is expecting to attract and continue to attract the best educated people from all over the world, rather than doing what it takes to educate them from childhood here. Do you know whether that plan will work for 40 more years?

    Would you bet money either way? ;)

    (Would I? NO.)

  • Report this Comment On June 22, 2012, at 10:53 PM, portefeuille wrote:
  • Report this Comment On June 23, 2012, at 12:14 AM, Estrogen wrote:

    Good stuff per usual Morgan. According to this thesis, Russia should be an economic powerhouse, but communism and the cold war did a number there.

    Germany is another interesting study, as they took a beating toward the end of the war, but have bounced back well. Culturally, the Germans are very good produces and generally do not overspend. Euro was probably a bad idea as their citizens knew up front, but their government went ahead regardless.

  • Report this Comment On June 23, 2012, at 1:04 AM, whatsthepoint wrote:

    Good column. But you could have dug a bit deeper into the mechanics of these numbers. The fact is that white Americans have nearly as low a birthrate as Japan does. But America will not suffer the difficulties of an aging society because it's population will continue to grow through immigration. China and Japan more or less do not allow immigration, and will not do so anytime soon, so they won't have this option until it's too late.

    Immigration will save America, and keep us on top economically. The Chinese economists I know are terrified of China "growing old before growing rich." That fate is already sealed, because demographics take 2 generations to play out.

  • Report this Comment On June 23, 2012, at 3:04 AM, sliderw wrote:

    Good article on the impact of demographics on Japan. But the part trying to model/predict the future is iffy. For example, how would the model change when, one day, the Chinese government wakes up to the demographic reality and scraps its one-child policy? One thing's for sure: The model becomes quite useless.

  • Report this Comment On June 23, 2012, at 12:16 PM, badsangria wrote:

    Will labor force size really be the key factor to economic growth and leadership in 2050, let alone now? I would argue the number of consumers who are not already bankrupt is more important, sadly.

  • Report this Comment On June 23, 2012, at 12:27 PM, Tomohawk52 wrote:

    This almost seems like some sort of Ponzi Scheme in the sense that in order to increase productivity we need more workers to subsidize retirees and in order to do that we need to do one or more of the following:

    increase the birthrate

    increase immigration

    increase the retirement age

    lower the life expectancy of the population

    In a finite world I am a bit confused as to how any of these things can be infinitely continued. Except maybe the last one? Bring on the lard-filled doughnuts!

    Isn't it true also that in general (at least in North America) poorer, less-educated people tend to have more children on average? Does this mean we are perhaps better off having well-educated immigrants come here than trying to encourage the locals to breed?

  • Report this Comment On June 23, 2012, at 12:57 PM, ynotc wrote:

    regardless of your opinion on the matter the fact is that we would have an additional 40 million tax payers and workers if abortion was not legal.

    The economic activity of these 40 milliion individuals would have solved many of the problems that we are experiencing today. The tax base alone would have solved many of the social security/medicare issues.

  • Report this Comment On June 23, 2012, at 1:04 PM, hiddenflem wrote:

    Morgan, thanks this was an interesting read. You have outstanding takes.

  • Report this Comment On June 23, 2012, at 1:23 PM, Samadd wrote:

    It seems UK has a greater life expectancy than US. If Obamacare has an effect and if Americans start looking after themselves this will have a major impact on the figures.

    It appears the projections were extrapolated with no allowance for increased life expectancy.

    I like the article but as others have said - a lot can change in 38 yrs.

  • Report this Comment On June 23, 2012, at 1:59 PM, Pinpress wrote:

    I, too, wonder whether the numbers of "working-age" Americans might not end up being skewed, with a huge percentage of them being from a generational poverty culture (low education, poor financial prospects, many children, dependent on handouts). What proportion of children are in poverty today compared to 40 or 50 years ago? Are there statistics to show how the birth rates of families in generational poverty, the middle class, and the rich play out over the next 50 years? How that might affect the long-term prospects for America's economic outlook? Frankly, I'm a bit frightened at the eventual prospect of a teeming majority of blissfully uneducated non-workers expecting an ever-shrinking number of the highly skilled to support them over their entire lifetimes.

  • Report this Comment On June 23, 2012, at 3:29 PM, ryanalexanderson wrote:

    > regardless of your opinion on the matter the fact is that we would have an additional 40 million tax payers and workers if abortion was not legal.

    That is not a fact. It's not even a good opinion. Not only do you discount that a certain percentage of unwanted children would probably themselves be a burden on the social safety net, but you may also discount a certain proportion of mothers who may hurt themselves seeking other methods of abortion.

    I'm neutral on the ethics of abortion laws, but suggesting it is a panacea for demographic issues is ridiculous.

  • Report this Comment On June 23, 2012, at 5:41 PM, idanpl wrote:

    Not sure how one can predict what's going to happen in 2050...

    what if Japan suddenly changes its immigration policy letting people from age 18-30 to immigrate to the country?

    What if there's another world war or nuclear war?

    What if we extend the pension age to the age of 75 as the life expectancy will be 100 or even more than that?

    So much can change in the next 40 years, that I'm not sure we can use this data.

  • Report this Comment On June 23, 2012, at 9:35 PM, NotJesseL wrote:

    I wonder what the impact of a global plague would be on these demographics. In the 1300's the European population was halved by plague. Surely the aging population , the decreasing effectiveness of antibiotics and increasing health care costs is setting us up for a similar event. I would not be surprised if a plague of some sort takes out a big bump of older people about the time I get to that age. :-(

  • Report this Comment On June 24, 2012, at 12:11 AM, richie54 wrote:

    You hit the nail on the head, as usual, Morgan. Thurow never saw the explosion in immigration to the United States. What has happened here since 1991 will keep the United States competetive for decades to come.

  • Report this Comment On June 24, 2012, at 1:32 AM, promommyfool wrote:

    Your proving my sociology classes points for my teacher. He gave us a world picture of all the contries that have too many children and not enough adults to raise them in war torn Africa and the Middle East. He showed us the baby boomer retirement firgures and how much less consumption will be driving the economy inthe furter, and he showed an interesting outcome for all the countries practicing selective abortions for an increase of males and causing a steep decrease in girls being born. When girls are scarce, as china is leanring, there aren't going to be as many grand kids in the offing. Slowing growth is going to have the general effect of lowering the population for all of us and the (do more with less) mantra you hear so much is going to get really scary.

  • Report this Comment On June 24, 2012, at 1:35 AM, promommyfool wrote:

    I suspect bride price will be replacing the dowery system pretty soon in some places. Guys will be the ones lucky to marry.

  • Report this Comment On June 24, 2012, at 9:32 AM, athar000 wrote:

    any economist , thinker who predict future taking past events is the biggest fool on planet , if this was the case almost every stock anyalst would be billionaire, the future has no relation to the past events , secondly in 2050 almost all physical jobs would be done by machines , it doesnt matter either you are 20 years old or 50 , only creative work will be left for humans , coming financial crisis is testimony for that , with current labour laws , it give more incentive for industry to invest in machine rather in human.

  • Report this Comment On June 24, 2012, at 5:48 PM, cooncreekcrawler wrote:


  • Report this Comment On June 25, 2012, at 11:52 AM, kabarnei2 wrote:

    How about a simpler article.

    Which country should we be looking to for future growth so we don't miss the party?

  • Report this Comment On June 26, 2012, at 2:04 PM, RondoAZ wrote:

    After all these days, it was illuminating to read the comments. Do to the very nature of the medium, it seems to bring out the critic in all of us. So be it.

    My take is that the information provided was different from what I expected and valuable as one piece in a many piece puzzle called the future. I also appreciate that you set the tone with Thurow's book, "Head to Head" which I read in 1st printing as an executive in a large multi-national trying to save American manufacturing.

    Many times as I ponder the global economic scene, I think back to his book and see where we are versus where he thought we'd be, or where I did at the time. I admit to being more fearful of a strongly allied Europe that would be more aggressively anti-American in its economic and trade posturing. That doesn't seem to be in the cards for the next few years.

    I'll come back to the recent Barron's interview with Ray Dalio and his insight that we are in a global deleveraging that will take years. Those who do it best will win the future, and I predict it won't be just countries or giant alliances, but individuals who have the best opportunity to gain.

  • Report this Comment On June 29, 2012, at 11:28 AM, chrisphs wrote:

    Although Canada is relatively small compared to the economies listed, but your readership from Canada is high. Could you either include the fiures for Canada or tell us where to find them. Thanks

  • Report this Comment On June 29, 2012, at 5:46 PM, critter88 wrote:

    Increasingly, value is created through innovation. While the U.S. today has an older population and must less people than China, the U.S. dominates in key areas (e.g., Apple, Google, Intel, Facebook). How many people does it take to be economically equivalent to one Steve Jobs? My fear is that in the rush into China, U.S. companies will sacrifice their future by agreeing to share proprietary trade secrets. Not only do we allow China to catch up, but they can now leverage their large young population to overtake us. We are own worse enemy!

  • Report this Comment On January 23, 2013, at 12:53 PM, ETFsRule wrote:

    Great article. All the more reason to look at emerging markets. Countries like Colombia, Peru, Malaysia, Nigeria, and Egypt all have strong demographic trends.

    Looking ahead to 2050, you will need to think outside the box if you want to achieve high returns.

    Some good demographic data can be found here for pretty much any country:

  • Report this Comment On September 13, 2013, at 6:05 PM, ich1ban wrote:

    To the poster who said that the Chinese are low maintenance.

    I've lived in China so I can post here with some authority.

    That is generally true, especially of the older generation. But, wasn't that true of our father's and our grandfather's generation, especially rising from a similar agricultural economy, similar to China?

    The Great Depression family was definitely of this mindset.

    However, the Chinese are becoming very demanding of high tech goods, cars, movies, and anything you can think of that their Western-counterparts demand.

    There are some pretty good articles out about how much leverage the average chinese person takes on in the form of credit.

    As their incomes grow, their appetites become exponential. They are going to be the highest consumers of pork per capita in the coming years.

    Their environment is completely and utterly polluted. I lived in Beijing and there were days I couldn't see my own hand.

    They do have the stigma or stereotype of not being wasteful, but let me tell you that those paradigms are shifting, and shifting fast.

    I'm not sure about you but I've never seen a culture so emphatically focused on beauty in my life.

    If the stories of college students (which are true) selling their kidneys for Iphones doesn't shock your worldview, then I don't know what will.

  • Report this Comment On September 13, 2013, at 10:55 PM, TroyCash wrote:

    Thank you ich1ban! I cannot help you but I truly understand the problem.

  • Report this Comment On December 05, 2014, at 8:35 AM, ortho1g wrote:

    working age doesn't mean the work

  • Report this Comment On September 22, 2015, at 11:28 PM, DeweyTrane1 wrote:

    Outstanding work Morgan.It made me feel even more optimistic and more proud to be an American.

    As much as I love France(no relevance to your article),I decided a few months ago after buying a bottle of French wine that I don' care if I ever do that again, because now we even have the best wines in the world.And I am not a xenephobe.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1921799, ~/Articles/ArticleHandler.aspx, 10/26/2016 11:43:13 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,217.78 48.51 0.27%
S&P 500 2,144.73 1.57 0.07%
NASD 5,273.20 -10.20 -0.19%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes