These days, everything is moving faster in the U.S., except for population growth.From our March 2009 post "Demographically Driven Inflation and Deflation":
According to the U.S. Census Bureau figures released Monday, growth from July 1, 2012 through July 1, 2013 was 2.3 million people, or 0.71 percent of the total U.S. population.
That’s less than last year’s 0.75 percent growth, and the slowest rate since 1937.
Census Bureau researchers say the slow expansion of people in the country is due to Baby Boomers, by far the largest segment of the population, getting older, as well as fewer immigrants entering the U.S.
Meanwhile, in case you’re interested, the U.S. population when the clock hits midnight Tuesday will stand at 317,297,938, give or take a few people. That’s an increase of 2,218,622 from last New Year’s Day.
Political Calculations is quirky. On the one hand they link to Prof. Shiller's merged Cowles/S&P data (first rate scholarship/database). On the other they do a "On the Moneyed Midways" linkfest that seems aimed at a totally different target audience. Here's an example of the former:
There are two questions that we'll seek to answer in this post:Before we go any further though, for the sake of eliminating the suspense involved, here are the answers to both questions:
- How might the change in a nation's population over time affect its rate of inflation?
- Are U.S. baby boomers the most inherently evil generation ever in economic history?
We are being a bit facetious with our second question, but let's see if you don't draw a similar conclusion after we work through the first question.
- Predictably.
- Yes.
That question arises as we've recently been looking to develop a model for anticipating the future rate of inflation in the United States, which we could then incorporate into the kind of tools we develop and make available to everybody in the world here at Political Calculations. In doing that, we began with a July 2006 paper by Ivan Kitov, a geophysicist whose work in economics we first became familiar with back in 2005 (via one of David Smith's discussion forums, whose archives unfortunately appear to only go back four years), which has intrigued us for some time: Exact Prediction of Inflation in the USA.
In the paper, Kitov presents his findings of a remarkable correlation between the measured rate of inflation observed in the U.S. and the change of the size of the U.S. workforce over the years from 1965 through 2002, which is observable in the figure we've excerpted from the paper. In this chart, we see that inflation, as measured by the GDP deflator, closely follows the trajectory determined by the change in the size of the U.S. labor force (dLF) with respect to the total labor force (LF) some two years earlier. In simpler terms, changes in the rate of inflation in the U.S lag the change in the relative size of the U.S. labor force by a two year period.
How That Might Work How might changes in the size of the US. workforce drive changes in the U.S. inflation rate? We suspect that the answer to that question lies in the change in consumption patterns driven by those entering and exiting the U.S. labor force....MORE, including some interesting charts.
