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War Room 06 Dec 2012 Demographics – They are a changin’

War Room 06 Dec 2012 Demographics – They are a changin’. War Room. Monthly macro discussion Using tools in context Update on HiddenLevers Features Your feedback welcome. Demographics – They are a changin’. Demographics – Where are we now? Demographics – Where are we going?

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War Room 06 Dec 2012 Demographics – They are a changin’

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  1. War Room 06 Dec 2012 Demographics – They are a changin’

  2. War Room • Monthly macro discussion • Using tools in context • Update on HiddenLevers Features • Your feedback welcome

  3. Demographics – They are a changin’ • Demographics – Where are we now? • Demographics – Where are we going? • III. Scenarios • IV. Product Update

  4. HiddenLevers Demographics – where are we now?

  5. USA – Current age demographics • Reading population graphs • Show distribution of various age groups in a population • Pyramid = expanding • more young people + less old people • House = stationary • young people + seniors emerging • Kite = contracting • more old people + not reproducing • Wide base pyramid = youth bulge • social unrest + recessions More on population pyramids

  6. Comparison – Age demographics as Destiny • INDIA • expanding • BRAZIL • contracting • CHINA • contracting • (birth policy) Middle-East Youth Bulge Evident Egypt Jordan Gaza Yemen

  7. USA – current diversity demographics • Minority babies exceeded white babies in late 2011 • Recent projections show whites falling below 50% of total population by 2050.

  8. US Election Demographics: 1980 vs 2012 Sources: UConn Roper Center Archives, 2012 Exit Polling • Brookings Institute: Minorities likely decided 2012 election • 2012 - most racially polarized election in history

  9. HiddenLevers Demographics – where are we going?

  10. US Age Demographics - Projected 2010 2050 US population aging rapidly, but base of pyramid should remain in tact

  11. USA Age Demographics - International Context • US fertility rate at roughly replacement level of 2.1, compared to Japan at 1.36 • US non-immigrant population is aging rapidly, as in Europe + Japan • (US is one generation behind them) • Majority of US population growth to 2050 expected to be via immigration (contrast to 0 immigration in Japan) • Despite aging of America, US working age population in 2050 will be around 300 million, equaling today’s total population bottom line 1. USA in better shape than Europe + Japan 2. USA in no worse shape than China

  12. Japan: Will USA follow same pattern? healthy age demographics … not so much

  13. Japan: Demographic Disaster in Slow-Motion Who you callin’ dependent? Japan population aging into dustbin

  14. Japan: Demographics + GDP I knew it was da yoots. bottom line YOUNGER POPULATION = SUSTAINABLE GDP GROWTH

  15. USA – Diversity Projections No, we are not turning Japanese • Virtually all future US population growth among minorities • White + Black steady. Hispanic grows most • Population growth since 1980 from immigration: 58% • Population growth until 2050 from immigration: 80% • GDP growth depends on education of immigrants Fruits

  16. Immigration – Busted Myths Myth Mexicans coming in droves Immigrants taking US jobs 3. Immigration at all-time highs • Reality • Net Migration from Mexico now negative • border arrests down 50% since 2008 • Illegal immigrant population not growing • 12.5% of population, 15% of workforce • overrepresented due to aging domestics • 14.9% of population was immigrants in 1890. Currently 12.5% • Two thirds legal, one third illegal • 10.8 illegals – 40% came in legally

  17. HiddenLevers Baby Bust Brain Drain Beneficiary Demographics - Scenarios

  18. Downside Scenario: Aging Baby Boomers • SF Federal Reserve • Direct relationship between age demographics + P/E ratios • Baby boomers aging, withdrawing from markets • Downturn continues into 2020’s

  19. Upside Scenario: Brain Drain Beneficiaries • Smart immigration can avert Baby Bust • Merit-based immigration reform • Making it easy for world’s best + brightest to come to USA • Educating children of immigrants already here • Smart immigrants = GDP growth back above 3% bottom line developed country realities mean immigration is a necessity for growth

  20. Demographics – Baby Bust or Brain Drain Beneficiary? Guidance Baby Boomers withdrawing assets to fund retirement GDP stagnant to declining, similar to Japan Retail Sales takes a hit as Boomers stop spending 5. SF Fed research projects nearly 50% drop in S&P • Guidance • Successful immigration form based on merit • GDP growth back above 3% due to immigration • Increased spending due to prime working-age immigrants • Only chance for GDP growth in developed countries

  21. HiddenLevers – Product Update • Interactive Lead Generation App • Integrations: - Schwab Portfolio Center - Fortigent • UI: Buttons + Sorting of Advanced Stats • Coming soon: • PDF-friendly versions of all HiddenLevers pages • Annual feedback session - what do you want to see?

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