In 1967, I was two years old. This was the year that Chapel Hill Mall opened on the border of Cuyahoga Falls in North Akron. A few years later in 1975, Rolling Acres Mall opened at the border of Akron and Barberton. As the parents of the Baby Boomers migrated towards the suburbs, and as transportation became more affordable for those families, shopping malls allowed families to have unique and varied shopping experiences all within the confines of one geographic location.
Rolling Acres Mall Chapel Hill Mall
Source: Akron Beacon Journal
As a member of the Stow High School class of ‘84, shopping malls were a very important meeting place. In addition to the food court, they also housed many of the movie theaters we gathered in to see everything from Jaws to Star Wars to Back to the Future.
As we moved toward the late 90s, new opportunities to shop became available with widespread access to the Internet. The shiny retail behemoths, which had only been created 40 to 50 years earlier, eventually began to shut down after the Great Financial Crisis in the late 2000s. The last store at Rolling Acres Mall shut down in 2008, and Chapel Hill Mall finally gave up the ghost in 2021 after struggling for many years from both a decline in traffic and in the quality of its stores. Going there after 2016 was a scary experience that no longer resembled the mall from my childhood.
Then, something else started popping up in their place en masse. As the demographic profile of our population continued, we started seeing nursing homes and assisted living facilities dot the landscape. Rachel and I live on the border of Stow and Hudson Ohio, and there is easily more than half a dozen of these facilities within a two-mile radius of our home. Many of these did not exist before 2010.
This has happened while the United States population has continued to grow. When Chapel Hill Mall opened in 1967, the US population was just under 200 million people. Today, the US postal population is just under 340 million people. Given the fact that birth rates in the United States have continued to decline, it is amazing that our population has grown by more than 140 million people over the last five decades. Even more amazing is the fact that between now and the end of the century, the US population is expected to grow, albeit at a much slower pace, as you can see in the chart below.
As you look at the graph above, you will likely note that the population of many countries are projected to decline over the next 75 years. This is true even in places with large populations such as China. You will likely remember that in 1980 the Chinese government implemented a one-child policy. Due to the fear of overpopulation, the Chinese government kept this policy in place until 2016. As a result, China has an uneven population distribution which is very top-heavy toward its rapidly aging segments. As you can see below, the younger population is not growing quickly enough to support its elders.
The risk is that the Chinese economy may be heading toward a fertility-led depression. Since the onset of the COVID-19 pandemic, China's consumers have experienced a significant negative wealth effect, as they have seen drops in the value of their homes and their stock portfolios. This has led to sentiment and confidence dropping, and a reduction in consumer spending.
As a result, young Chinese families are having fewer babies than at any point in the last 50 years, even though the one-child policy no longer exists. In 2022, there were only 950,000 births in China the lowest ever recorded. This represents 50% fewer babies than just ten years ago. You will note in our final chart today that the fertility rate, which shows the number of births per woman, has been below 2.0 since 1991. In 2021 it dropped to an all-time low of 1.16. There are not enough children being born to replace the aging population.
In 2022, China's population declined by 850,000 people. This is the first time China has seen a decline in population since 1961. We know that GDP growth is a function of population growth and productivity. For many years people have been concerned that China's economy was going to overtake that of the United States. We heard similar prognostications in the late 70s and early 80s about Japan. It is hard to imagine China's economy continuing to grow at a rapid pace while its population is declining.
This led Ed Yardeni, one of our favorite economists and market strategists, to recently author an article entitled China: The World's Largest Nursing Home, published in late November. I do not know how many shopping malls such as Chapel Hill or Rolling Acres were built in China during the 60s or 70s. However, based on demographic trends, more nursing homes and assisted living facilities may soon be popping up in China than in the United States.
We regularly hear stories about the threat of China in the news. I wanted to share a different perspective on the trends and challenges their economy will be facing in the coming years. We thought it was an important data point to consider as we continue “Moving Life Forward”.
© 2024 Jesse Hurst
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