Demographics have a significant influence in how societies develop and change. More elderly people ultimately mean more funeral home services. More births initially mean more diapers. Certain aspects of life are more or less a given, just like death and taxes. I have taken the State of California’s birth and death trends and looked at them with 1989 as the baseline. From this simple analysis a very noticeable trend is apparent in both births and deaths.
A hundred different investing conclusions can be derived from the observation of these two trends. California is a very large and diverse state, which makes it a good sample for the nation. Here are a few quick observations.
- Less births and more deaths leads to a lesser need for new housing construction. A demographic wave can’t be depended on to goose a boom in residential housing construction.
- Fewer births lead to less need for services like education. This wave can be extrapolated from pre-school to college age.
- More deaths means more healthcare and elderly care services needed prior to passing.
- The need for legal services to help streamline wealth transfers will increase.
- Fewer births eventually lead to a smaller tax base. Pension systems that have greater payouts to a larger retired population will need larger contributions per employed person, given a smaller workforce. This means a greater wealth transfer from working age folks to retired folks. As more people die, fewer pensions payouts will be necessary. A long drawn out process.
- An older population needs greater supervision and assistance. Assisted living services will grow in proportion to elderly population growth.
- More funeral, cremation and other end of life related service needs will be necessary.
- More adult diapers will be needed.