The Bureau of Labor Statistics recently published employment forecast projections through 2033. The U.S. economy is expected to add 6.7 million jobs by 2033, bringing total employment to 174.6 million, with an annual growth rate of 0.4% — 70% slower than the previous decade’s 1.3% growth rate. Projected employment growth is largely influenced by labor force expansion, which is increasingly limited by the slowdown in population growth. Notably, while the employment base has grown over the last decade, the 70% slowdown appears to be a deeper structural issue related to population, demographics, and labor force participation, rather than simply the result of a larger base.
For investors, these projections should be considered when forecasting future supply and demand growth across markets. More importantly, investors will need to adopt more creative (value-add) and sharpshooting strategies to navigate slower growth rates, especially in a higher interest rate environment.
Chart 1: Total US Employment
Population and Labor Force
The civilian population aged 16 and over is projected to grow by 16.4 million to 283.3 million by 2033, with a slower annual growth rate of 0.6%, the lowest on record (Chart 2). This slowdown can partially be attributed to the historic low birth rates in the US over the last few decades. Moreover, as the population ages, labor force participation is also expected to drop from 62.6% to 61.2% by 2033, affecting both men and women.
Chart 2: Total US Population, 10-Year Compound Annual Growth Rate
Emerging Industry Trends
Healthcare and social assistance will lead job growth in the next decade, driven by an aging population and higher chronic disease rates. The IT and business services sectors will also expand, boosted by demand for digital services and AI development. Conversely, retail trade is projected to decline as e-commerce continues to reduce in-store sales.
Chart 3: Wage and Salary Employment Change by Sector
Strategic Investment in a Slower Growth Economy
Bottom line, the projected slowdown in U.S. employment and population growth over the next decade will require investors to rethink investment strategies. With labor force expansion constrained by demographic changes and an aging population, investors should prioritize sectors with strong growth potential, such as healthcare, social assistance, and IT, while carefully selecting markets that offer sustainable long-term growth opportunities.
Successfully navigating this environment will demand targeted investment strategies that are resilient in the face of slower overall growth. Lastly, slower growth periods can still offer solid returns for investors who remain patient and adaptable, focusing on long-term trends and gradual expansion rather than quick gains in a traditional 3 to 5 year holding period.
Source: Bureau of Labor Statistics