As the United States contends with an evolving population and labor market, understanding the intersection of demographics and economic performance has never been more critical. This article examines the forces reshaping our workforce, consumer behavior, and policy debates over the next decade.

From an aging population to changing immigration patterns, each trend carries profound implications for growth—and for the choices policymakers must make.

Core Demographic Trends

The U.S. population is undergoing a generational shift that will reshape the labor force over the coming decade. As baby boomers retire and birth rates remain subdued, the share of Americans over age 65 has risen from 12.4% in 2007 to 17.9% in 2024 and is projected to reach 21.2% by 2035.

• Americans 65+ increased by 5.5 percentage points (2007–2024)
• Projected to exceed one-fifth of the population by 2035
• Prime-age participation near all-time highs in 2024

Meanwhile, the native-born population aged 20–64 is expected to shrink every year for the next decade. This decline contrasts sharply with overall growth fueled by immigration, as newcomers tend to be younger and join the workforce at higher rates.

According to the Congressional Budget Office (CBO), immigration will account for almost 100% of U.S. population growth from 2025 to 2035—and exceed total growth after 2031. Without this inflow, the working-age population would contract, threatening long-term prosperity.

Labor Force Projections and Growth Rates

The CBO forecasts a dramatic slowdown in labor force expansion, averaging just 0.5% annual growth between 2025 and 2035. When projected immigration is reduced or eliminated, this pace falls further, underscoring the outsized importance to workforce expansion that newcomers represent.

• Baseline (current immigration): 0.5% annual labor force growth
• Halved net immigration: significant reduction in growth
• Zero net immigration: near-stagnant labor force size

These scenarios highlight the range of possible outcomes and the stakes involved. A smaller labor pool means fewer consumers, reduced tax revenues, and mounting pressure on social safety nets.

Economic Growth Forecasts and Productivity Tensions

Forecasts for real GDP growth over 2025–2035 diverge sharply. The Trump administration’s Office of Management and Budget (OMB) projects 2.89% annual growth, while the CBO anticipates just 1.83%. Each halving of immigration lops off roughly 0.2 percentage points.

A key tension lies in productivity assumptions. The CBO expects productivity to grow at 1.38% annually, while the OMB’s numbers imply a whopping 2.34% pace. To achieve OMB-level output with halved immigration, productivity would need to accelerate to 2.76%—a historically unprecedented surge.

Consumer Spending, Inflation, and Market Dynamics

Consumer behavior remains a cornerstone of economic vitality. Deloitte forecasts real consumer spending growth of 2.1% in 2025, slowing to 1.4% in 2026. Spending patterns vary by category:

• Durable goods: 2.9% growth in 2025, then 0.5%
• Nondurable goods: 2.3% in 2025, 1.0% in 2026
• Services: 1.9% in 2025, 1.5% in 2026

Inflation expectations display similar volatility. Consumers foresee 4.8% year-ahead inflation in September 2025—down from 6.6% in May, yet still well above the Federal Reserve’s 2% target. The CPI is projected to average 2.9% in 2025 and accelerate to 3.2% in 2026.

Housing Market Indicators

Housing starts are predicted to decline to 1.31 million in 2025 and dip further to 1.27 million in 2026. As the Fed eases rates thereafter, starts may rebound through 2029, only to fall again in 2030 as demographic headwinds constrain construction.

Home price appreciation also appears muted, with the benchmark index rising 2.3% in 2025 and 1.4% in 2026. Beyond 2026, appreciation may accelerate toward 4%, driven by supply shortages in high-demand markets.

From 2027 to 2029, housing stock may grow faster than population. But by 2030, slower household formation among aging cohorts will likely stall residential investment.

Policy Implications and the Path Forward

Recent immigration flows slowed markedly in 2025, prompting Deloitte to halve its net migration assumption—from 6.8 million adults to 3.3 million over five years. This revision exerted substantial downward pressure on growth forecasts, as fewer workers mean diminished output.

Policy debates now center on enforcement, visa reforms, and deportation levels. The CBO notes that one million deportations would exceed baseline levels by roughly 670,000—further tightening the labor market.

Economic sentiment has grown pessimistic: 74% of Americans rate conditions as fair or poor. Under scenarios combining high tariffs and weak immigration, the U.S. could enter recession in late 2026, with full recovery delayed until early 2028.

At its core, the dilemma is stark: either embrace larger immigration flows or accept that sustaining historically normal GDP growth rates will be impossible. Even the most ambitious efforts to boost participation among current workers cannot offset underlying demographic shifts.

Policymakers must weigh the benefits of a younger, growing workforce against political and social considerations. Similarly, businesses and communities should plan for tighter labor markets, invest in automation and training, and advocate for policies that align with their long-term growth objectives.

Ultimately, the interplay between demographics and dollars will define America’s economic trajectory. By understanding these forces and making informed choices, we can navigate the challenges ahead and seize opportunities for renewed prosperity.