The Graying of America

Most people know that the percentage of older Americans is increasing dramatically. What’s less known to the average person is how that graying will impact different areas of the country.

The overall demographic shift is illustrated in the chart below that shows four age cohorts. The first three are each based on equal twenty-year spreads: people age 0 to 19, those who are age 20 to 39, and the age group 40 to 59. The fourth cohort is defined as those age 60 and older.

The age group 60 and up was roughly 40% smaller than the other cohorts in 2000. By 2010 it had begun to close the gap, but it was still about a third smaller than the other cohorts. By 2030, however, this 60+ age group will be nearly the largest cohort—surging from 57 million in 2010 to over 93 million in 2030.

U.S. Population by Age Cohorts

The reason for this increase is the aging of the baby boom generation along with the overall increase in life expectancy. The ramifications are many. The shift affects consumer spending patterns, health care needs, labor force mix, and so on.

The demographic shift will be manifest differently throughout the nation. The map below shows the age mix for every county in the nation as it transforms from 2010 through 2030. Each county is colored according to the cohort that is the largest during that given year (using the same cohorts from above).

A word about these data: the age mix data at the county level for 2010 are derived from the decennial census. The projections by age through 2030 at the national level follow forecasts from the Census Bureau. The county-level projections are produced by Chmura and can be accessed through the JobsEQ labor market system.

What do the data show? In 2010, fewer than 10% of the counties in the nation had demographic mixes where the 60+ age cohort was largest. By 2019, however, the 60+ cohort should be largest in over half of the counties. By 2027, this cohort is expected to be largest in three-quarters of the nation’s counties.

Areas of the country not expected to see the 60+ cohort become the largest during this timeframe include regions in Texas and California, various metropolitan areas, and counties with large college student populations—the latter of which stick out on the map among the light blue areas, as the age 20 to 39 cohort will remain the largest in these places.

The interaction of a shifting age mix and overall population growth also can create surprising effects. For example, the population of the Cincinnati metropolitan statistical area (MSA) is projected to grow an average annualized 0.5% from 2015 through 2030. This population growth, though, is being driven by expansion in the age 60+ cohort (+2.2% per year). The population age 0 to 59 in Cincinnati is expected to actually decline overall during this same period. And Cincinnati is not alone in this boat; other MSAs expected to see overall population growth but declines in population under age 60 are Philadelphia, Chicago, Memphis, Green Bay, Mobile, and many others.

The Social Security “full benefit retirement age” is currently 66 for people reaching that age today, and that will rise to 67 for people reaching that age in 2030. Despite this forestalling in retirement age, the number of people in the nation at full retirement age will increase substantially. From 12% at full retirement age in 2010, by 2030 in the United States approximately 18% will be at full retirement age.

This shift is shown among the largest metropolitan areas below. Despite variety in current mix and growth rates, a dramatic increase in the percentage of population at full retirement age is coming across the board. 

Top 50 MSAs by % Population at Full-Retirement Age
MSA 2010 (% age 66+) 2030 (% age 67+)
New York-Newark-Jersey City, NY-NJ-PA MSA 12% 18%
Los Angeles-Long Beach-Anaheim, CA MSA 10% 16%
Chicago-Naperville-Elgin, IL-IN-WI MSA 11% 17%
Dallas-Fort Worth-Arlington, TX MSA 8% 13%
Houston-The Woodlands-Sugar Land, TX MSA 8% 13%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD MSA 12% 19%
Washington-Arlington-Alexandria, DC-VA-MD-WV MSA 9% 14%
Miami-Fort Lauderdale-West Palm Beach, FL MSA 15% 20%
Atlanta-Sandy Springs-Roswell, GA MSA 8% 14%
Boston-Cambridge-Newton, MA-NH MSA 12% 18%
San Francisco-Oakland-Hayward, CA MSA 12% 17%
Phoenix-Mesa-Scottsdale, AZ MSA 12% 17%
Riverside-San Bernardino-Ontario, CA MSA 10% 15%
Detroit-Warren-Dearborn, MI MSA 12% 19%
Seattle-Tacoma-Bellevue, WA MSA 10% 16%
Minneapolis-St. Paul-Bloomington, MN-WI MSA 10% 16%
San Diego-Carlsbad, CA MSA 11% 16%
Tampa-St. Petersburg-Clearwater, FL MSA 16% 22%
St. Louis, MO-IL MSA 13% 19%
Baltimore-Columbia-Towson, MD MSA 12% 18%
Denver-Aurora-Lakewood, CO MSA 9% 15%
Charlotte-Concord-Gastonia, NC-SC MSA 10% 16%
Pittsburgh, PA MSA 16% 24%
Portland-Vancouver-Hillsboro, OR-WA MSA 11% 17%
San Antonio-New Braunfels, TX MSA 10% 15%
Orlando-Kissimmee-Sanford, FL MSA 12% 17%
Sacramento--Roseville--Arden-Arcade, CA MSA 11% 17%
Cincinnati, OH-KY-IN MSA 11% 18%
Kansas City, MO-KS MSA 11% 17%
Las Vegas-Henderson-Paradise, NV MSA 11% 15%
Cleveland-Elyria, OH MSA 14% 22%
Columbus, OH MSA 10% 16%
Indianapolis-Carmel-Anderson, IN MSA 10% 16%
San Jose-Sunnyvale-Santa Clara, CA MSA 10% 15%
Austin-Round Rock, TX MSA 8% 13%
Nashville-Davidson--Murfreesboro--Franklin, TN MSA 10% 16%
Virginia Beach-Norfolk-Newport News, VA-NC MSA 11% 17%
Providence-Warwick, RI-MA MSA 13% 21%
Milwaukee-Waukesha-West Allis, WI MSA 12% 18%
Jacksonville, FL MSA 11% 18%
Memphis, TN-MS-AR MSA 10% 16%
Oklahoma City, OK MSA 11% 16%
Louisville/Jefferson County, KY-IN MSA 12% 19%
Richmond, VA MSA 11% 18%
New Orleans-Metairie, LA MSA 11% 18%
Raleigh, NC MSA 8% 14%
Hartford-West Hartford-East Hartford, CT MSA 13% 20%
Salt Lake City, UT MSA 8% 13%
Birmingham-Hoover, AL MSA 12% 19%
Buffalo-Cheektowaga-Niagara Falls, NY MSA 15% 22%
Source: Chmura Economics & Analytics, JobsEQ

Research support was provided by Allison Magee and Asim Timalsina

Winning the Next Prospect With Labor Data

How do you make big decisions? If you’re involved in a site selection, you know that reliable labor data are critical to the process. Chmura has been helping communities for twenty years and we’ve seen fantastic results! For insights into why we do what we do, please view the attached brief video!

Tracking Liftoff: If the Fed Raises Rates this Week, Will it Impact Consumers?

If the Federal Open Market Committee (FOMC) raises the federal funds rate target on Thursday, September 17, at the end of their two-day meeting, it is bad news for borrowers and good news for savers.

For people who are about to borrow money for a home with a 5- or 7-year adjustable-rate mortgage or a car, it means interest rates could be about a quarter of a percentage point higher. As a result, monthly loan payments would be larger.  Rates on longer-term mortgages, such as the 30-year fixed-rate mortgage, probably won’t move much, if at all, because they are more dependent on inflation expectations than shifts in Fed policy. But they would likely tick upward if the Fed continues to raise the target for the federal funds rate over the next few months

On the positive side, savers who have money at commercial banks and in money market accounts should see an uptick in their savings rate.

The bottom line for the overall economy is that an increase in the federal funds rate target is good news.  It means the FOMC believes the economy is strong enough to continue growing in the face of higher interest rates.

The graphic below allows you to track how FOMC members are thinking about when that liftoff in rates should occur. Click on the photo of an FOMC member to see that person’s view about the timing of liftoff, how the view may have evolved since last December, and key quotes that are hyperlinked to full speeches.

The photos of voting members are shown in circles with nonvoting members in squares. Key economic indicators are presented on the right (where the data shown represent the original estimates that were available at the time of the meeting rather than more recent revisions).

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The Decline in College-Aged Students

The “echo boom” of births in the United States peaked in 1990. The children of that peak became college-freshman aged around 2008. Since then, the population of 18 to 19 year olds in the nation has been trailing off. Children born at the peak of the echo boom are now about age 25, and most from that peak are out of college. As a result, the size of the prime college-aged population is on the downswing.

The prime college-attending ages are 18 to 24. This cohort makes up about 58% of the college student population.[1] The population in the United States age 18 to 24 peaked in 2013 at 31,535,000. As of 2015, this population cohort is estimated to have slipped to approximately 31,214,000, a drop of one percent.

This downturn is expected to continue till 2020 when the age 18 to 24 cohort population hits a trough of roughly 30,555,000—a drop of 2.1% from 2015 levels. 

Population projection 2014-2030

Some areas of the country will be seeing more drastic declines than this, while other areas can expect to see no drop at all. Nine states are projected to see growth in the 18 to 24 cohort over the coming five years. From 2015 to 2020, states expected to see this population cohort expand include Utah (+3.9%) and Texas (+3.4%).On the other hand, states forecast to see steeper-than-average declines include Michigan (-6.9%) and New Mexico (-6.8%). 

There is some good news, however, for those wanting to see an increase of population in the college-aged cohort. The number of births in the United States hit a trough in 1997—many children born in that year are just beginning their freshman year in college right now. Following 1997, the number of births began trending upward and peaked in 2007 at a height surpassing that of the echo boom. So while postsecondary schools are facing some unfavorable demographics in the short run, another swell is on its way. 

Research support was provided by Allison Magee and Asim Timalsina.

[1] Based on Fall 2013 enrollment data from the 2014 Digest of Education Statistics.

Defense Budgets and Actual Funding: Presidents Don’t Typically Get What They Ask For

Another budget showdown this fall seems inevitable. The President’s Budget for Fiscal Year 2016 calls for $561 billion in defense spending (excluding overseas contingency operations).  That’s $38 billion above sequestration levels.

Ultimately, however, budgeting is decided in Congress, and a look back at previous budget proposals shows that the president never gets exactly what he asks for. The chart below shows a five-year projection of Department of Defense (DoD) funding in each president’s budget proposal (the dashed line) compared with the actual funding levels passed by Congress (the solid black line).[1]

Differences between proposed and actual budgets have varied by president—especially during the last drawdown in defense spending in the late ‘80s and early ‘90s.  As in the past, we should expect changes to this year’s proposed budget.

Research support was provided by Patrick Clapp.

[1] This chart is a reproduction of Figure 21 in the Center for Strategic and Budgetary Assessments’ Analysis of the FY2015 Defense Budget, recalculated and updated with the FY2016 Budget. The numbers are shown in 2015 dollars.