September 20, 2021

I’m not sure I want to know what would happen if the world, the global economy, businesses, stock markets, governments, and everything just stopped growing, though I may find out. I’m not a growth zealot. I like growth, but I also know it ebbs and flows.

But today, no growth means failure to many people. The notion of no growth seems practically impossible as the economy rebounds from COVID-19. But looking past COVID-19, we’re moving toward a no-growth world in which stock markets return zero, economies are stagnant, companies struggle to keep what they have, and everyone just wants things to stay the same.

That said, change will still happen. If anything, the pace of evolution will accelerate as firms scramble to find new markets and gain market share.

But soon we’ll have to get used to not growing because people and productivity power growth, and both have been decreasing. In fact, growth and productivity in the U.S. have been slowing over the past 50 or so years. Over the past decade, productivity has been increasing at just 1.3% a year.

Sustainable long-term growth demands a rising population. Even an economy fully supporting productivity will struggle to grow at times if the population isn’t increasing. And the master key of demographic growth is the fertility rate (the average number of children a woman gives birth to during her lifetime).

The fertility rate in the U.S. had a 35-year high in 2007 at 2.12 births per woman. But since then, it’s fallen steadily, dropping to a record low of 1.64 in 2020. And last year there were more deaths than births in half of all 50 states, while global fertility has been falling for decades.

When productivity and population growth are slowing, growth will too. The long-term direction is clear.

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