Population Growth and Stocks, from Kim Zussman
Today the US census reported slower growth in population. Over the past few years, Japan has experienced flat or declining population growth.
Here is a regression of contemporaneous annual return in Nikkei (1944-2009) and annual population change:
Regression Analysis: nik chg versus pop chg
The regression equation is
nik chg = 0.0801 + 6.22 pop chg
Predictor Coef SE Coef T P
Constant 0.080 0.0489 1.64 0.107
pop chg 6.223 3.863 1.61 0.112
S = 0.296056 R-Sq = 4.0% R-Sq(adj) = 2.4%
The slope coefficient is not significant, but there is a positive correlation between stock prices and population growth (as shown by the loose correlation plot).
This may not be the correct lag to check: why would population change and stock returns correlate in the same year (except for wives the following year in Connecticut)? Birthrate should decline as a population ages, and to the extent that assets are sold more to finance the consumption of pensioners than new parents.
