Statistically Speaking: Furniture Industry Could Feel Lasting Impact of Population Slowdown and Shifts

February 17, 2020  by HFBusiness Staff in Business Strategy, Industry   

In 2019, natural increase (births minus deaths) fell to 957,000, marking the first time in decades that it declined below one million, forecasting a trend toward fewer births and more deaths. While birth rates are at historical lows, death rates are rising as Baby Boomers are retiring and aging.

Paired with dropping natural increase rates, international migration to the U.S. (immigration) has decreased to 595,000 people from 2018 to 2019, almost half the amount in 2016 of 1.05 million. Using data from the U.S. Census Bureau, this month’s Statistically Speaking details the factors in the country’s declining population growth by region alongside the impact on the future of the economy and furniture industry.

Population Changes
The annual net increase in the U.S. population peaked in 1992 when the U.S. added 3.53 million people to the population either through natural increase (births minus deaths) or net international migration (immigration) (Table A). Since 2015, when the U.S. added 2.3 million people, the growth rate has fallen to its lowest level in 80 years – reaching less than 1.6 million net change in 2019.

While total population increased only 2.4% in the last four years, births decreased 5% alongside a 5% increase in deaths. Once an offset in the rising low birth rates, immigration dropped 42.8% during the same fouryear period. Figure 1 breaks down the components of population from 2015 to 2019.

Many analysts believe the immigration restrictions started in 2016 combined with a perception that the U.S. has fewer economic opportunities than it did before the Great Recession has caused the decline. These components combined added 1.55 million to the population in 2019 compared to 2.33 million in 2015 – a decline of 6.6%. Economists worry because the growth rate of the economy is traditionally determined by the income growth per capita and population growth. While the impact of slowing population growth can hurt the entire U.S., some regions are already experiencing a decrease in population. As shown in Table B, the Northeast has decreased in population size over the past 2 years – dropping by 0.11% from 2018 to 2019. Overall 10 states decreased in population with West Virginia, Alaska, Illinois and New York topping the list in percent of population lost. Eleven states increased in population over 1%. Idaho, Nevada, Arizona, Utah and Texas were in the top five – with four of those in the West region. Idaho was the only state to reach a growth above 2%. Of the top five states gaining the most people, three of the states are in the South – Texas, Florida, and North Carolina.

Birth Rates

Birth rates continue to decrease every year – down to a rate of 11.6 births per 1,000 population in 2019 from 12.8 in 2011 (Table C). According to the Centers for Disease Control, this is the lowest level since the 1980s, despite an improving economy. Many people are finding it increasingly difficult to afford children. Rising maternity fees, childcare costs, and increasing debt mixed with a static wage growth are causing many people to delay having children and/or having fewer children. Many Millennials claim they have delayed child birth, not by choice, but by economic necessity.

With birth rates at historical lows, only eight states had more births in 2019 than 2018. The top four states with the highest numerical increases were in the Northwest – Utah, North Dakota, Alaska and South Dakota. The lowest birth rates in 2019 occurred in New Hampshire, Vermont, Maine, Connecticut, and Rhode Island – all in the Northeast. But only one state in the nation, Vermont, a low birth rate state, increased its birth rate from 2018 to 2019, but only by 0.8%.

Death Rates

While the birth rate is decreasing in the U.S., the death rate is ramping up – increasing from 8.1 deaths per 1,000 population in 2011 to 8.7 in 2019 (Table D). This rate will increase as more Baby Boomers enter old age. They are projected to make up 20% of the population by 2029, less than 10 years away. As more Baby Boomers head to retirement, the impact on the labor force and consumer spending will increase as employed Boomers have traditionally been high consumers of furniture products. However, retirees produce and contribute less to the economy, and also spend less than younger working consumers.

West Virginia, Alabama, Maine, Mississippi and Pennsylvania had the highest rates of deaths in 2019 – all above 10.4 per 1,000 population. The states with the lowest death rates were Utah, Alaska, Colorado, Texas and California. Utah has half the number of deaths per 1,000 population as West Virginia and Alabama, reflecting the much younger demographic.

Natural Increase

In 2019, natural increase (births minus deaths) fell below 1 million for the first time in decades, due to the aging population of the Baby Boomers. As shown in Table E, the natural increase rate has declined an average of 6% per year since 2011. The majority of states decreased their natural increase rate with only 10 states showing a slight natural increase in population per 1,000 persons from 2018 to 2019. Not surprisingly, younger populated states - Utah, Alaska, Texas – had the highest rates of natural increase.

International Migration

U.S. net immigration levels peaked in 2016 at 1.05 million just as tougher immigration laws were being enacted and have fallen consistently to just over 595,000 in 2019. Over 40 percent of all immigrants in 2019 settled in Southern states, consistent with historical trends (Figure 2).

The total international migration rate dropped 15.2% to 1.8 immigrants per 1,000 population 2018 to 2019 – the lowest level in more than a decade (Table F). With the decline in natural increase, population growth has become more dependent on immigration and the dependency is expected to increase over the next decade. Low immigration paired with falling natural population increase rates point to growing labor shortages and a weakening economy.

Of the 17 states with international migration over 10,000 persons in 2019, only two states received more immigrants than the previous year – California (increasing 3.8%) and Washington state (up 2.1%).

Domestic Migration

The final missing piece to understanding the shifting population demographics is “domestic migration,” the net number of current U.S. residents moving into a state versus the number moving out of state.

Data shows that the percentage of Americans changing residence is at a post-World War II low of 10.1% — less than half the rate the U.S. had in the 1950s and lower than in 1990s. The domestic migration rate continues its negative trends in the Northeast and Midwest, while the South and West attract the highest mobility rates (Table G). For example, in Idaho, for every 1,000 residents, 15.3 moved into Idaho in 2019 – the highest domestic migration rate within the U.S. Nevada, Arizona, South Carolina and Delaware completed the list of the top five states with highest domestic migration rates. Conversely, in the Northeast, in 2019 for every 1,000 population, a net of 5.3 people left the region. In the Midwest, the net domestic migration was -2.4 persons per 1,000. The impact of negative domestic migration on some states discussed here may seem insignificant, but compounded over time and coupled with low birth rates, high death rates, and low immigration can have large economic consequences in the future. Note that city migration rates will not be available from the Census Bureau for a few months.