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Sunday, February 5, 2017

Energy Consumption vs. Core Populations - Trending Down Together

In this article, I want to spend a little time reviewing two of the most relatively reliable data sets, population size/growth and energy consumption/growth.  I'll compare the total energy consumption of nations / groupings of nations vs. their core (25-54yr/old) employed populations and total core (25-54yr/old) populations.

What's the point?  We are in the midst of a structural, secular change and policy makers / central bankers insistence that it is just a transitory issue in need of more rate cuts and more credit to ''restart the economy" is absolutely ridiculous.  This is the story of cause (declining population, where it counts) and effect, declining energy consumption and economic activity.  And this is about to really pick up speed to the downside (more on that, China, below).  Plus, we can ponder if real economic "growth" coincident with declining consumption of energy is possible...or is that growth just debt and financialization?  Also keep in mind while viewing the charts and data below, if not for the twenty six years of Federal Reserve (& CB's worldwide) interest rate cuts incenting all the debt creation, energy consumption would have begun declining long ago.

Below, total US energy consumption (quadrillion BTU's) vs. core employees.  Correlation?  Causation?  Anyway, just is what it is.  The US consumes 18% of global energy but US total energy consumption has been falling since 2007 and is now back to where it was 17 years ago, in 1999....likewise, the total number of 25-54yr/old employees peaked in '07 and is now back to 1999 levels.
Below, same as above but added core population through 2025 (UN assumes, perhaps wrongly, continued levels of immigration to achieve that slight population growth from now through 2025).
Below, core employees vs. total energy consumption.  Japan consumes 3.5% of global energy.  Japan's total energy consumption peaked in '06 and is now back to total levels last seen in 1992...and the total number of Japan's core population now employed is on par with total employed in 1982.
Below, same as the above, but with core population through 2030, there will be fewer in the core population than are total core employees now.  For a highly levered economy, disaster.

EU -
I have more difficulty finding employee data on the 25-54yr/old population vs. the energy data I can gather.  The EU consumes 14.4% of global energy.  Present EU energy consumption is now on par with levels last seen in the 1980's.
For reference, below is the Italian core employment vs. total Italian energy consumption, as an example of what much of the EU looks like.
You are welcome to draw your own conclusions what the data below portends for China.  Core population vs. total Chinese energy consumption (China consumes 22% of global energy).
Taking the above on an annual change basis (chart below)...annual change in core population vs. annual change in total energy consumption.  Couple points should be evident, China's massive growth in energy from 2000 onward was entirely against their population trends (or simply a massive credit fueled misallocation).  In the most recent year available for energy data, 2014, the Chinese core population was still growing by 10+ million annually and despite obscene debt creation, energy consumption stalled.  This year the core will only grow by 2.6 million...and soon  the massive secular contraction begins.  The implications for energy and economic growth are simply put, dire.