J. Kirby Snideman, AICP
CDS Community Development Strategies
The US population growth rate is currently around 0.7%. US GDP growth during the 4th quarter of 2015 was 1.4%. Stock market growth of over the long term is generally expected at 6-7%. What do these growth rates mean and how can you quickly makes sense of them? This article explains the Rule of 70, a tool frequently used by urban planners to help the public quickly grasp the impact of growth rates--like Jeb Bush's 4% economic growth goal released last year.
Image Source: New York Times | Explanation of the Rule of 70 |
The following is an excel spreadsheet that will allow you to explore the effect of growth rates on a population. Everything is filled out except two variables, the starting population and the rate of growth. Manipulate these two variables to explore different scenarios your current town or city may experience in the future.
Population Growth Simulator and the Rule of 70.xlsx
Note: while the Rule of 70 is often used in discussions of population growth, it can equally apply to other subjects where rates of growth are considered.
A Word on US Population Growth
The United States has one of the highest growth rates of any industrialized nation, even though it’s only around 0.7%. The map below depicts the various percentage growth rates around the world.
For the US, the current growth rate is the lowest its been since just after the Great Depression. This slow growth is mostly due to lower birth rates and decreased immigration. Is 0.7% too slow? Well, lets use the Rule of 70 to see: 70÷ 0.7 = 100. At this rate, the US population would double in 100 years. That means adding just over 3 million people a year for the next 100 years.
Having More Realistic Expectations of Growth
While in New Hampshire pursuing his presidential aspirations, Jeb Bush stated his economic goal for America:"4 percent growth as far as the eye can see.”Using the rule of 70 you can see why his 4 percent growth pledge was viewed by many economists as ambitious at best and unrealistic for any lengthy period of time. This would mean the economic output of the nation would essentially double in roughly 18 years.
While growth like this has been achieved during relatively brief periods in the past, these were times when population growth was rapid and/or technology or demographic changes were significantly increasing per capita economic output. For example, after the recession of 1981-82, real GDP growth averaged 4% over the next six years. Several factors were at play during this period, not the least of which was the beginning of the personal computer revolution as well as the addition of millions of women to the workforce.Now, with a more advanced, equitable, and mature economy, most economists agree that it will be harder and harder to duplicate periods of similar growth into the future--especiallygiven the lower rate of population growth previously discussed,
Remember the Rule of 70
Well, next time you find yourself in a conversation or presentation and growth rates come up, remember the Rule of 70, Its a quick and easy way to make sense of numbers that can sometimes be challenging to visualize.
About the author:Kirby Snideman is an AICP certified planning professional with a focus in economic development and currently serves as a senior market analyst and project manager at CDS. Originally from Houston, Mr. Snideman has lived, studied, and worked in several places including Utah, New York, California, Iowa, Illinois, Oregon, and London, England.
