Demographics Still Aren’t Destiny

Editors’ note: MarketMinder Europe favours no party nor any politician. Our analysis solely assesses developments’ potential economic and/or market effects—or lack thereof.

Last week, America’s Congressional Budget Office (CBO) unveiled its best guess about US population growth over the next three decades. Its conclusion: The population will flatline by 2050, as American inhabitants’ numbers will be smaller and grow more slowly than in its January projection.^[i] Partly as a result, the CBO expects higher inflation, lower employment, possible labour shortages and slower economic growth.^[ii] Whilst the research here was US-focussed, we find the sentiment applies across much of the developed world, where ageing populations raise alarm over the economic and market fallout.

Sound bad? Financial publications we follow predictably jumped on these findings, warning they present an “economic red flag.”^[iii] But we don’t think the population outlook really presents a clear and present danger to the US economy or investors. Remember folks, forecasts are only ever opinions—especially long-range ones. And, even if this outlook proves right on population trends, we think the conclusions drawn are questionable at best.

First off, what is the CBO projecting (in)exactly?^[iv] It pencils in America’s population increasing from 350 million this year to 367 million in 2055.^[v] This would be -5.4 million fewer than what it thought in January based mainly on lower projected immigration tied partly to recent legislation.^[vi]

Like the CBO, we are nonpartisan. Our sole interest here: What economic effects would 367 million people in 2055 have versus 372-ish million? The population would still grow, just somewhat slower. But before lugging in all the assumptions (e.g., labour force participation, people’s productivity, technological advancements and money supply growth over the next 30 years) to render a verdict on the economic effects, ask yourself: How solid is the CBO’s (recently revised) population projection to begin with?

The CBO is America’s official budget scorekeeper, so its pronouncements seemingly carry weight. But in its latest report, even it admits:

“CBO’s population projections are highly uncertain, especially in the later years of the 2025–2055 period. If rates of fertility, mortality, or net immigration are higher or lower than CBO projects, the resulting population will differ in size and composition from the one described here. For example, immigration could differ significantly from CBO’s projections because of future legislative or administrative changes, which are not incorporated into the current projections. The effects of such differences would be larger in later years because the differences would compound over time.”^[vii]

Moreover, the CBO is no stranger to actual results veering from its forecasts due to unforeseen circumstances. For example, as Exhibit 1 shows, it couldn’t predict COVID lockdowns’ employment impact. We don’t think anyone could have. But even post-lockdowns, its forecasts have remained wide of the mark. With CBO demographic outlooks so distorted in the short term, taking long-term projections to the bank appears specious to us.

Exhibit 1: America’s Employment Growth Trending Above Past Projections

Source: US Federal Reserve Bank of St. Louis and CBO, as of 17/9/2025.

Besides, for investors, we find demographics are too slow-moving to affect stocks—in America or anywhere globally. To see how, assume the CBO’s population forecast proves accurate (we know, a huge IF, many grains of salt, etc.). As described, that would mean -5.4 million fewer people than otherwise over 30 years.^[viii] But this would amount to a difference of only -180,000 people per year—within the normal variance of one month’s US employment report.^[ix]

And this is just the demographic aspect—by most accounts we read, demographers have an easier time of it than economists. Trying to translate population shifts into various economic effects—on inflation, GDP and others—seems like quite a stretch to us. Based on our observations, there is no telling what people will do—or how they might adapt. Again, take the CBO’s population view as a given. Over the next few decades, how will those affected react? Will businesses throw their hands up in the face of anticipated labour shortages? Or will they innovate like they have for centuries against challenges of the day? What of AI’s possible effects? Or robotics and automation?

People have been doing more with less labour for eons, and we see little to suggest now would be different.^[x] This is why we think such long-term outlooks are noise for investors. Our research shows markets move most on surprises: Glacial structural shifts that society can plan for decades in advance are amongst the least important issues for them.