The coronavirus pandemic has done a doozy on the country’s demographics, with fertility rates plummeting and death rates higher than expected for years to come, the Congressional Budget Office said Wednesday.
Analysts are now figuring an additional 140,000 deaths per year, or about 4.5% extra, for the rest of this decade.
The fertility rate, meanwhile, has dropped to 1.6 births per woman. Even when it begins to rise again, it will plateau at 1.75 births — well below the 1.9 births CBO figured on before the pandemic, and far less than the 2.1-birth “replacement rate” needed to maintain the population.
By 2043, immigration will account for all net population growth, CBO said.
It all means a much smaller country than CBO was projecting several years ago. In 2019, just before the pandemic, CBO figured the total population 30 years out would reach 388 million. Now, CBO puts the estimate for 2052 at a much slimmer 369 million.
Those projections were part of an overall grim warning about the trajectory of the federal budget, with Uncle Sam poised to shovel out an increasingly large amount of cash just to pay off the debts Congress has already incurred.
The annual deficit — the difference between taxes collected and money spent — will nearly triple over the next 30 years.
Total debt — the accumulation of those deficits — will “far exceed” all previous U.S. records, and still be heading deeper into the red, CBO said.
“Such high and rising debt could have significant economic and financial consequences,” the analysts said in one of their more stark warnings. “It could, among other things, slow economic growth, drive up interest payments to foreign holders of U.S. debt, elevate the risk of a fiscal crisis, increase the likelihood of less abrupt adverse effects, make the U.S. fiscal position more vulnerable to an increase in interest rates and cause lawmakers to feel more constrained in their policy choices.”
That warning comes despite some short-term good news.
The deficit this year will drop below 4% of GDP, as a surge in revenue begins to eat into the massive spending spree Congress has been on during the pandemic. Revenue this year comes to 19.6% of GDP, while spending is 23.5%.
Over the next decade, things will remain about the same with spending slimming to 23.2% of GDP and revenue tumbling to 18.1% — still higher than the average of recent decades, but nowhere near enough to cover Washington’s spending.
By the middle of the century, revenue will tick back up to nearly 19% of GDP, but spending will be approaching 30% of GDP, leaving a massive hole in the budget.
Interest payments on the debt grow the most, going from 1.6% of GDP now to more than 6% in the middle of the century.
Also driving spending is the expansion of Uncle Sam’s major health programs, followed by rising Social Security payments. Those are all fueled by the changing demographics, with the aging population putting more burden on a slimmer pool of workers.
The lower projected fertility rate is a dominant factor, accelerating trends.
For example, the fertility rates of women over 30 and under 30 had been converging. But during the pandemic, for the first time, the older crowd had a higher rate than the youngsters. As recently as 1980, the under-30s had a fertility rate three times that of the over-30s.
CBO figures life expectancy will slip in the coming decade, falling from 79.3 years to 78.6 years. And those who make it to age 65 are now projected to live another 19.2 years, down from 19.9 years in the 2021 projection.
By the middle of the century, things will have improved, with life expectancy ticking back up to 81.8 years, and those who make it to 65 projected to live 21.4 years.
