U.S. Population Growth Fuels Opportunities
On February 11, 2008, the Pew Research Center published their projections for U.S. population growth through 2050. While many in the mainstream media focused on the role of immigration and demographics shifts, the news for entrepreneurs could hardly be better.
Pew estimates that the population of the U.S. will reach 438,000,000 by 2050 or an increase of 48% over the population in 2005. That is the equivalent to the entire population of Russia moving to the United States or for that matter the entire U.S. population in the mid-1940’s. Even if the U.S. enacts tighter immigration standards, Pew projects a 30% growth and in their “best case” scenario as much as 68% growth!
To read the full report: Immigration to Play Lead Role In Future U.S. Growth
The Last 40 Years
Looking at historic population levels in the U.S., it is clear that this growth will present an enormous opportunity for entrepreneurs. By way of comparison, the five largest U.S. retailers by revenue, all started with markets of less than 200 million people. In fact, only one dates from the 19th century. (Wal-mart 1962, The Home Depot 1978, Kroger 1883, Costco 1976 & Target 1902 in order of revenue) These companies make a nice comparison, because all focus primarily on the U.S. market. Yet the most striking point is that 40 years ago, none, but Kroger, would have been a familiar name to most people.
The Next 40 Years: People Buy Things
Even if these firms remain dominant, there is incredible room for new entrants in a market with 142 million additional consumers. With the rate of increase for children and elderly exceeding the rate of increase for workers, there will be a number of opportunities specific to these niches. The outlook for services and real estate will be at least as lucrative.
- 142 million more people will need a place to live
- 12 million more workers will have an additional $395B to spend*
Even disregarding the specifics of the shift in the dependency ratio, which could increase by 22% to 72 children or elderly per worker, the size of the U.S. economy must grow to provide for these people. There will be an incredible increase in the number of consumers in the U.S. over the next 40 years no matter which projection ultimately materializes. Whether you own real estate or sell goods or services, such phenomenal growth will provide incredible opportunities.
In the last 40 years, the U.S. population has risen from 200 million to 300 million people. That pales in comparison to the estimated 438 million people who will live here in 2050. What opportunities do you see with this population boom?
* 2005 USD based on Pew’s projected increase in working age population and the U.S. median income of $32,611