What the Graying Population Means for the Economy

The impact of demographic shifts

Ric Edelman: It's Thursday, July 6th, and this world has a “birth dearth”. We've talked before about dropping birth rates around the world, and it is getting worse. In Italy, they've just reported that births there have fallen to the lowest level since 1861. That's when the current nation of Italy was formed. Less than 400,000 babies were born in Italy last year. That's down nearly 2% from the year before.

The Italian government is trying hard to reverse the trend. They now actually pay women up to $200 a month for every baby they have. And you get that $200 a month, $2,400 a year until the baby's 21 years old. The payments haven't helped. It has not improved the birth rate. And there's a reason why the payments don't really do anything to address the shortage of childcare services.

So getting the money doesn't do you a lot of good if it means your home having to raise the child because you can't find a babysitter allowing you to go to work. Italy has childcare facilities for just one out of four babies at the same time. There are now 22,000 people in Italy who are over the age of 100. That's three times more than in 2000.

Think about this. Fewer babies. More old people. 

That's a bad combination economically. And Italy is not alone. In every advanced economy around the world, the average number of children per woman is below two. We need 2.1 babies per woman to sustain the population. The only exception is Israel. In Italy, the birth rate is 1.2. Remember, it needs to be 2.1. Italy's get this is only the third worst. Spain and South Korea have an even lower birth rate than Italy does. They're only producing 0.8 children for every woman in their countries.

With fewer babies, that means fewer future workers. That means less tax revenue to pay for the pensions and the health care that today's people need and will need in the future. Fewer workers also means fewer doctors to pay for all of this. Italy's been borrowing money. Their debt to GDP is 135% among the highest in Europe. And like I said, this problem is occurring all over the world.

Here's one fun statistic. In Japan, they're selling more adult diapers than baby diapers. And guess what? Adults wear diapers many more years than babies do. So this is a challenge around the world and it represents a big problem for political leaders who have to solve it. It represents big challenges economically, but with all of these, there are always investment opportunities as well. 

And there's one in particular, the Global X Aging Population ETF. You want to learn about it, go to Global X ETFs.com. The symbol is AGNG. The link is in the show notes. Or ask your financial advisor about the “birth dearth” and the investment opportunities that you can take advantage of.

Coming up next week, next Wednesday at 2 p.m. Eastern, I'm going to be hosting a one hour webinar on crypto SMAs. What's an SMA? A separately managed account. These are increasingly popular with financial advisors. They offer substantial benefits and advantages you don't get from ETFs, and you'll discover why a lot of financial advisors really like them. And now if you are a financial advisor, you'll discover that there's a crypto SMA. So come to this webinar, you'll discover how crypto SMAs work, how to gain access to them, and how you, as a financial advisor, can use them to serve your clients better. I'll be interviewing Matt Hogan, the Chief Investment Officer at Bitwise Asset Management and Chris King, the CEO of Eaglebrook Advisors. This webinar is designed for financial advisors, but everyone is allowed to attend you too. You can register for the webinar at DACFP.com.

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