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Demographics

An Investing Megatrend: How Demographics and Social Changes are Shaping the Future

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For millennia, people have found support and community through defining factors, ranging from age and race to income and education levels.

However, these characteristics are not static—and drastic demographic changes are starting to create powerful ripple effects in the 21st-century economy.

The Impact of Demographics and Social Changes

Today’s infographic from BlackRock delves into the significant impact that demographics and human rights movements have on global markets. Of the five megatrends explored in this series, demographics are predicted to have the farthest-reaching impact.

Megatrends - Demographics and Social Change

What are Demographics?

Demographics are the characteristics of populations that change over time. These include:

  • Age
  • Gender
  • Race
  • Birth and death rates
  • Education levels
  • Income levels
  • Average family size

As a result, major demographic trends offer both unique challenges and opportunities for businesses, societies, and investors.

The Biggest Shifts

What are the biggest shifts in demographics that the world faces today?

1. Aging Population

The global population is aging rapidly─as fertility rates decline worldwide, those in the 65 years and older age bracket are steadily increasing in numbers.

2. Future Workforce

As the population continues to age, fewer people are available to sustain the working population. For the first time in recorded history, the number of people in developed nations between 20 to 64 years old is expected to shrink in 2020.

3. Immigration Increase

Immigration has been steadily increasing since the turn of the 21st century. Primary migration factors range from the serious (political turmoil) to the hopeful (better job offers).

In particular, areas such as Asia and Europe see much higher movement than others, causing a strain on resources in those regions.

4. Consumer Spending

A steadily aging population is slowly shifting the purchasing power to older households. In Japan, for example, half of all current household spending comes from people over 60, compared with 13% of spending from people under 40.

How Does Social Change Play a Part?

Demographics are the characteristics of people that change over time, whereas social change is the evolution of people’s behaviours or cultural norms over time.

Strong social change movements have often been influenced by demographic changes, including:

  • Ending poverty and hunger
  • Expanding healthcare in developing nations
  • Reforming education quality and accessibility
  • Championing gender and racial equality

Examples of major human rights movements include creating stronger environmental policies and securing women’s right to vote.

Opportunities for Investors

These changes pose some exciting opportunities for investors, both now and in the near future.

Healthcare

Global healthcare spending is predicted to grow from US$7.7 trillion in 2017 to over US$10 trillion in 2022. To meet the demands of age-related illnesses, companies will need solutions that offer quality care at much lower costs—for patients and an overburdened healthcare system.

Changing Workforce

With a declining working population, adapting a workforce’s skill set may be the key to keeping economies afloat.

As automation becomes commonplace, workers will need to develop more advanced skills to stay competitive. Newer economies will need to ensure that automation supports a shrinking workforce, without restricting job and wage growth.

Education Reform

By 2100, over 50% of the world will be living in either India, China, or Africa.

Global policy leadership and sales of education goods and services will be shaped less by issues and needs in the U.S., and more by the issues and needs of Africa, South Asia, and China.

—Shannon May, CoFounder of Bridge International Academies

In the future, education and training in these growing regions will be based on skills relevant to the modern workforce and shifting global demographics.

Consumer Behaviour

Spending power will continue to migrate to older populations. Global consumer spending from those over 60 years is predicted to nearly double, from US$8 trillion in 2010 to a whopping US$15 trillion in 2020.

Investing Megatrends

Demographics and social changes are the undercurrents of many economic, cultural, and business decisions. They underpin all other megatrends and will significantly influence how the world evolves.

As demographics shift over time, we will see the priorities of economies shift as well─and these changes will continue to offer new opportunities for investors to make an impact for the future of a global society.

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Millennials

Visualizing the Wealth of Americans Under 40 (1989-2023)

The wealth of American Millennials hit historic highs after the COVID-19 pandemic.

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This line chart shows the growth of wealth for Americans under 40 over the last 40 decades.

Visualizing the Wealth of Americans Under 40 (1989-2023)

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Millennials have been often referred to as a “broke generation.” Whether in conversations or on the news, it is common to hear how those born in the 1980s or 1990s are struggling in today’s economy, particularly when it comes to entering the housing market or saving for retirement.

However, data shows that the wealth of Americans under 40 years old has hit historic highs after the COVID-19 pandemic, suggesting that millennials have accumulated more wealth by their 40s than previous generations.

To illustrate this, the graphic above shows the average wealth per household, adjusted for inflation, for Americans under 40 years old from Q4 1989 to Q4 2023 (in December 2023 dollars). The data is sourced from the Federal Reserve and accessed via the Center for American Progress.

Post-Pandemic Recovery

Data indicates that younger Americans have reaped the most benefits from the strong economic recovery after the pandemic, enjoying low unemployment rates and rapid wage growth.

The average wealth of U.S. households under 40 was $259,000 in the fourth quarter (Q4) of 2023, compared to $164,000 in Q4 1989 and $182,000 in Q4 2000.

QuarterAverage Wealth for Those Under 40 (USD)
Q4 1990152K
Q4 1995146K
Q4 2000182K
Q4 2005184K
Q4 2010100K
Q4 2015148K
Q4 2020231K
Q4 2023259K

Looking specifically at millennial households, inflation-adjusted wealth has more than doubled during the same period.

The increase in younger Americans’ wealth is not concentrated in a single area. Average housing wealth—house values minus mortgage debt—rose by $22,000 from 2019 to 2023. Younger Americans also saw gains in liquid assets, such as bank deposits and money market mutual funds, business ownership, and financial assets, mainly stocks and mutual funds.

Additionally, non-housing debt, such as credit card and student loan debt, fell for this age group after the pandemic.

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