US Population Growth

The Economist recently argued that demography may explain secular stagnation.   For those who think oil is more likely to blame, here's a graph of US population growth since 1910.

US Population Growth (revised).png

US Annual Population Growth, 1910-2013

Source: US Census Bureau

The graph shows that population growth slows during economic downturns.  Indeed, the decline in population growth was much greater and more prolonged in the wake of the Great Depression than it has been recently. 

Since the Great Depression, meaningful population growth declines have been associated with oil shocks, notably during the First Oil Shock (the Arab-Israeli War of 1973); the Second Oil Shock (the Iran-Iraq War of 1980); the Third Oil Shock of 2008, associated with the Great Recession; and the Fourth Oil Shock, resulting from the Arab Spring in 2011. 

The resolution of these crises were historically associated with recoveries in population growth.  This was spectacularly true after World War II (sixteen years after the start of the Great Depression).  But it was also true during the Clinton years, when US economic growth was strong, the budget was balanced, and government spending was declining as a share of GDP.

In recent times, it has become fashionable to argue that demographics drive economic performance.  The historical record contradicts this assertion.  When the economy has performed well, population has increased.  When it has performed poorly, population growth has eased.

This is a basic lesson of ecology, including human ecology.  All other things equal, when resources are ample, populations increase.  And this is true for humans as it is for deer or sea lions. 

With the resolution of the Fourth Oil Shock, we should expect US population growth to once again increase, probably to a 0.9-1.0% annual growth rate, versus 0.7% in 2013.    Most of the growth, by the way, will come from increased immigration, both legal and undocumented.