How to Survive a Recession

LESSON 24: Follow the Demographics

Demographics is the distribution of the population by age, income, race, health, and other traits. Demographic changes over time drive economic growth in certain areas of the economy, and cause others to shrink. This is caused by demand patterns unique to the demographic distribution of the overall population. These demographic patterns are something that you should seriously consider when looking for a job during a recession or identifying investment and business opportunities

Industrialized Countries

“Baby Boomers” are creating economic changes in developed markets. Populations in the major industrialized countries are becoming increasingly older, with the majority of citizens age 30 and above. In the U.S., Europe, Canada, Japan, and Australia post-World War 2 families had more children than families do today.

As people age, they have a greatly increased need for healthcare. The average person over the age of 50 uses 10 times more healthcare dollars than the average person under 30. This creates opportunities for healthcare providers, long-term care, orthopedics, biotechnology, and pharmaceuticals.

As children grow up and leave home, the older generation often moves to a smaller residence or a retirement community. This will tend to increase the relative value of condominiums, townhomes, and retirement homes. Retired people also play golf, gamble, and buy motor homes. This will likely support the continued growth of casinos, golf courses, and other leisure activities enjoyed by the elderly. Finally, the current middle-age generation will fill funeral homes, cemeteries, and crematoriums in increasing numbers.

The Baby Boomers will likely pass their wealth on to their children and grandchildren, increasing demand for estate planning, tax, and trust services. Furthermore, the Baby Boomers are beginning put a tremendous strain on Social Security, Medicare, Medicaid, pensions, and other basic retirement institutions, creating opportunities for better and more efficient ways to manage retirement capital and benefit programs.

In developed nations, economic demand will increasingly come from older generations, rather than younger ones. This means teaching primary education, consumer products, motorcycles, skateboards, adventure vacations, handheld electronics, and a huge number of products and services aimed at youth buyers will slowly see their percentage of the economic pie diminishing over the next 10 to 30 years.

Emerging Markets

In comparison, emerging markets such as southern Asia, the Middle East, Africa, and Latin America have predominantly young and rapidly growing populations. Approximately two-thirds of the world's population is in developing economies, and this number is growing rapidly. This has the potential to create massive demand for consumer products and services, electricity, water, telecommunications, sewers, dams, roads, and many other basic items. In emerging markets, products aimed at children and families have strong growth potential.

Keeping these long-term demographic trends in mind will help identify and take advantage of major economic opportunities and avoid areas that are prone to economic slowdown.