A Return to Population Growth

One of the key drivers to growth in our economy is sheer population growth, which by its very nature spurs household formations. But so many other corners of our economy benefit from population growth other than just the housing market. These new entrants to our economy have to buy goods and services, put gas in their cars, pursue entertainment options, educate themselves and their children, and weave themselves into the fabric of the American consumer.

We take population growth into consideration when we develop our internal projections for growth in concrete and aggregate volumes. Over our firm’s 43-year history, we have watched as the growth has slowed to a fraction of what it was just 30 years ago, which is a drag on the growth of housing, infrastructure, commercial, and public work that is the natural pull-through for concrete production. And of course, the pandemic had an artificial downdraft on the population growth numbers as the lockdowns froze the movement of persons in and out of our society.

Now, data in a report the U.S. Census Bureau released at the end of 2023 estimates the U.S. resident population grew by 1,643,484 to a total population of 334,914,895. The population growth rate reached its highest level since the pandemic at 0.49 percent, which is just above the 2019 growth rate of 0.46 percent, while slightly below the 2018 growth rate of 0.53 percent. The report states that the primary source for the increase in population growth was net international migration, as migration levels returned to pre-pandemic levels. Total net international migration has been approximately one million for the past two years, as net international migration levels were at 999,267 in 2022 and at 1,138,989 in 2023. These consecutive high levels of increase suggest international migration trends are returning to normal.

The other driver of the U.S. population growth rate was positive natural growth (births minus deaths), which increased the total population by 504,495. The level of positive natural growth in 2023 was 126 percent higher than 2022 largely due to the 8.9 percent drop in the number of deaths in 2023. There was also a decline in the number of births of 0.7 percent.

But this growth rate pales in comparison to the growth of 30 years ago. With a peak of 1.40 percent in annual growth in 1992, there has been a steady, annual decline in growth percentages ever since, which has further negatively affected by the pandemic. And the likelihood of us ever returning to the population growth numbers of the 1990s are not encouraging given the anti-immigration sentiment currently being espoused by politicians nationwide. This despite the fact that improving healthcare and more healthy lifestyles are increasing the average age of the typical American. And by 2030, we will mark a demographic turning point, as that year all baby boomers will be older than 65. This will expand the size of the older population such that one in every five Americans is projected to be of retirement age. Later that decade, by 2034, older adults will outnumber children for the first time in U.S. history.

The year 2030 marks another demographic first for the United States. Beginning that year, because of population aging, immigration is projected to overtake natural increase, or the excess of births over deaths, as the primary driver of population growth for the country. As the population ages, the number of deaths is projected to rise substantially, which will slow the country’s natural growth. As a result, net international migration is projected to overtake natural increase, even as levels of migration are projected to remain relatively flat.

These demographic milestones are expected to make the 2030s a transformative decade for the U.S. population. Beyond 2030, the U.S. population is projected to grow slowly, to age considerably, and to become more racially and ethnically diverse. Despite slowing population growth, particularly after 2030, the U.S. population is still expected to grow by 79 million people by 2060, crossing the 400-million threshold in 2058. This continued growth sets the United States apart from other developed countries, whose populations are expected to barely increase or actually contract in coming decades.

Population growth and the resulting household formations are a key driver in concrete consumption, and is important for growing our volumes.

Pierre G. Villere serves as president and senior managing partner of Allen-Villere Partners, an investment banking firm with a national practice in the construction materials industry that specializes in mergers & acquisitions. He has a career spanning almost five decades, and volunteers his time to educating the industry as a regular columnist in publications and through presentations at numerous industry events. Contact Pierre via email at [email protected]. Follow him on Twitter – @allenvillere.