A few weeks ago, we argued that retiring Baby Boomers and record-high debt levels are two significant threats to the global economy. However, there is a third threat that was once believed to be impossible, yet it is now looming: population decline.

Over time, two factors determine the cost of all goods and services:

  • Supply-demand fundamentals
  • Inflation

Unlike inflation, demand is directly related to population growth.

U.S. and Canada Facing Threat of Population Decline

Due to a combination of factors, population decline is potentially the greatest threat to asset values in Canada and the United States.

Population growth and fertility rates are crashing globally – particularly in the West. While fertility rates have been on the decline for many decades, they are reaching alarmingly low levels at a time when immigration is also stalling.

U.S. population grew at just 0.474% in 2019 – the lowest since 1918!

US population growth declines
Source: The Word Bank

Just before the dot-com bubble, U.S population growth rate fell below 1% and has not recovered since – falling to a record low of 0.474 in 2019.

The chart below puts the decline in context. While the United States population continues to increase, it is expanding at its slowest rate in generations.

U.S. population continues to increase but very slowly
Source: Macrotrends

Fertility Rates and Immigration Falling in Tandem

Two factors drive population growth: fertility rates and immigration.

According to the Migration Policy Institute,

“More than 44.9 million immigrants lived in the United States in 2019, the historical numeric high since census records have been kept.”

That’s more than 10% of the U.S. population. And while that’s a huge number, immigration has recently collapsed.

The article goes on to report that,

“The foreign-born population remained largely flat between 2018 and 2019, with an increase of 204,000 people, or growth of less than 0.5 percent. This is consistent with the 203,000 increase from 2017 to 2018 and much lower than the approximately 787,000 increase—or 2 percent growth—seen between 2016 and 2017. The slowing growth of the immigrant population over the past few years is mirrored by the slowing growth of the total U.S. population since 2015.”

In Canada, only 184,370 immigrants were admitted amidst the pandemic in 2020, missing its goal of 341,000 by almost half the mark.

However, in the first two months of 2021, Canada welcomed 48,000 new permanent residents, almost as much as it did within the same timeframe in 2020, prior to the pandemic and travel restrictions that followed.

To fight population decline, Canada is more desperate than the United States (and most countries) for immigration numbers to hold.

Here is why:

“According to Canada’s Department of Finance, in less than 20 years, the number of working-age Canadians (aged 15 to 64) for every senior (aged 65 and over) is expected to fall from close to 5 to 2.5. It’s one of the largest projected decreases among Organisation for Economic Co-operation and Development (OECD) countries like Australia, Germany, Mexico, Japan and the United States.”

The majority of immigration applications to Canada fall into the ‘Economic Class’ pathway, specifically for services in high demand like caregivers and other skilled labourers.

With falling fertility rates, new immigrants are vital for economic growth and asset valuations.

According to the National Bureau of Economic Research,

“In the long run, low rates of fertility are associated with diminished economic growth.”

Falling Fertility Rates Behind Potential Population Decline in Canada and the U.S.

The fertility rate of a country is the average number of children women from that country will have during their reproductive years.

According to Britannica.com,

“For the population in a given area to remain stable, an overall total fertility rate of 2.1 is needed, assuming no immigration or emigration occurs.”

Canada has not had a fertility rate above 2.1 since the late 1960s.

Fertility Rates in Canada Continue to Hover Around 1.5

fertility rates decline in Canada
Source: Trading Economics


The U.S. has always had a higher fertility rate, especially in parts of the country where the cost of living is relatively low. At least until recently. Note the sharp decline below:

fertility rates drop in the US
Source: Trading Economics

Similar declines are happening in many countries all over the world.

In June of 2019, the UN released population projections and even forecasted a potential population peak.

The report crystallized what we believe to be an important threat to the global economy:

“The global fertility rate, which fell from 3.2 births per woman in 1990 to 2.5 in 2019, is projected to decline further to 2.2 in 2050.”

On the flip-side, the geographic hot-spots for population growth may surprise you…

“The new population projections indicate that nine countries will make up more than half the projected growth of the global population between now and 2050: India, Nigeria, Pakistan, the Democratic Republic of the Congo, Ethiopia, the United Republic of Tanzania, Indonesia, Egypt and the United States of America (in descending order of the expected increase). Around 2027, India is projected to overtake China as the world’s most populous country.”

Fewer people often imply less demand — exerting additional deflationary pressure on central banks when record-high debt is already weighing on the system.

The Great Warning for Canada and the U.S.

Europe continues to see a dramatic decline in fertility rates, with potentially dire consequences.

The National Bureau of Economic Research published a startling report back in 2009 that summed up Europe’s predicament.

“In 1960, Estonia was the only European nation whose total fertility rate was less than two. Today, only two European countries — Albania and Iceland — have fertility rates above two.”

Given the economic challenges overwhelming many European countries today, this ought to set off alarm bells in Canada and the U.S. given our similar trajectory.

Imminent Population Peak in Europe

A study produced by the University of Washington (and part-funded by the Gates Foundation) points to some troubling data for Europe’s economic outlook.

Fund manager, Tom Walker, who specializes in investing in global cities, cites the Gates-funded report, explaining,

“The population of Western Europe is predicted to peak in 2033 before declining by more than 20% by the end of the century…”

Walker continues with data from the study, stating,

“…that while the US population remained stable, population declines had been seen in a number of eastern European countries since the early 1990s. A number of Western European countries had already passed their population peak. These countries include Italy, Spain, Greece and Portugal.”

Spain’s relatively dormant real estate prices over the past decade are likely a consequence of their population challenges.

Spain House Prices | 1987-2020 Data

Spain house prices remain stagnant
Source: Trading Economics


This is not unique to Spain.

With the exception of Portugal, European countries experiencing drops in population and fertility rates are seeing a slump in home values across the board.

Population Decline Poses Threat to Many Asset Classes

The majority of Europe and North America are struggling with aging populations, lower fertility rates, and a decrease in immigration.

As a result, central banks will likely be pressured into adding the inflation necessary to prevent asset values from declining. And in a world in need of more robust supply-demand fundamentals, the balancing act being asked of policymakers is becoming increasingly precarious.

Global fertility rates need to pick up if population decline is not to cripple the economy and the values of many asset classes.


All the best with your investments,



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