Greg Ip

Articles by The Economist’s U.S. Economics Editor

Archive for the ‘Demographics’ Category

America’s demographic squeeze: Double bind

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A falling birth rate and much slower immigration presage long-term trouble ahead

Dec 15th 2012 | WASHINGTON, DC | from the print edition

[Greg Ip] ALTHOUGH America’s fiscal problems are among the worst in the rich world, its policymakers long took comfort that, when it came to demography, its outlook was one of the best. Because Americans have so many babies and welcome so many immigrants, they had more room to deal with the coming burden of pensions and health care for the elderly.But the savage recession of 2007-09 and its aftermath have not just deepened America’s fiscal hole; they have weakened those demographic advantages. America’s fertility rate has been falling since 2007, as has net immigration. Compounding this, the share of the population that is active in the labour force has slipped, both because of ageing and because of the recession’s lingering effects.

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Written by gregip

December 13, 2012 at 4:51 pm

Posted in Demographics

The jobs market: Where are the Workers?

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Feb 10th 2011 | WASHINGTON, DC | from the print edition

[Greg Ip] WHEN America’s job market isn’t disappointing, it’s perplexing. Take the month of January, when a net figure of just 36,000 non-farm jobs was created. Even by the miserly standards of the current recovery, that was low.

But in the same month the unemployment rate tumbled to a 21-month low of 9% from 9.4% in December. Its drop since November, when it was 9.8%, is the largest over two months since the prosperous days of 1958. Which of these bits of news gives the truer picture?

One reason that America’s jobs figures often send mixed signals is that they are drawn from two separate surveys. In this case, the survey of employer payrolls was almost certainly affected by snowstorms that ravaged much of the east of the country and which economists estimate may have kept 60,000 to 150,000 people away from work.

The survey of households, from which the unemployment rate is derived, tells a far more optimistic story. It finds that employment has surged by 882,000, or 0.6%, in the past two months, after adjusting for new estimates of America’s population. This is more in keeping with other data, such as car sales and GDP, which suggest that the recovery is picking up steam.

Yet for several reasons the fall in unemployment should not be taken as evidence of a job market on a roll. Read the rest of this entry »

Written by gregip

February 10, 2011 at 5:42 pm

Demography and the Economy: As Boomers Wrinkle

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FROM the moment they entered the workforce in the 1960s, baby-boomers began to shape America’s economy and politics. They will do the same as they leave. The first of the estimated 78m Americans born between 1946 and 1964 turn 65 in 2011, the normal age for retirement. As their ranks swell in coming years, the burden of financing their retirement will mount. So will their electoral importance.

Retiring boomers will squeeze the economy from two directions. The number of people enrolled in Medicare (federally funded health care, available from the age of 65) will grow from 47m in 2010 to 80m in two decades’ time. Enrolment in Social Security (federally funded pensions, available from the age of 62-67, depending on your birth year) will grow from 44m to 73m. The cost of the two programmes will grow from 8.4% of GDP in 2010 to 11.2% by 2030. Meanwhile, as boomers retire, the workforce will grow more slowly, as will the taxes to finance their benefits. The pensioner-worker imbalance and health-care inflation, which is driving up the bill for Medicare and Medicaid, the federal health benefit for the poor, will send the budget deficit into the stratosphere.

Both Barack Obama and Republicans in Congress claim that reforming such entitlements is a priority. But a demographic snag lies in the way. In the next two decades people aged 65 and over will rise from 17% of the voting-age population to 26% (see chart 1). Since the old vote more readily, their actual share of the electorate will be some three percentage points higher, reckons Robert Binstock, a political scientist at Case Western Reserve University in Cleveland.

The entire  article is linked here.

Written by gregip

December 29, 2010 at 7:11 pm

Cramped quarters: As children postpone their departure, households get larger

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[Greg Ip] IT IS hard to be an optimist about the housing market these days, but those so inclined like to note that as long as the population keeps growing, so should the demand for homes. But what if the larger population decides to share the same number of homes?

America’s census bureau has been publishing massive amounts of data from several, parallel surveys of the population in recent weeks. One of its more intriguing findings is that after shrinking for decades, households have started to grow. 

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Written by gregip

September 30, 2010 at 11:28 am

Posted in Demographics, Housing