JCHS: Update on Joint Center Household Projections

Update on Joint Center Household Projections

 by Dan McCue
Research Manager
In December 2012, the Census Bureau released a new set of national population projections that both incorporates data from the 2010 decennial US Census and updates the projection methodology.  These new projections are lower than those issued in 2008 due to reduced assumptions for both net immigration levels and fertility rates – the effects of which are only partially offset by lower assumptions used for mortality rates.  In the near term, the lower immigration assumptions account for over 80 percent of the population growth adjustment.  For example, in years 2015-2025, net annual immigration levels in the new projections average 898,000 (nearly 40 percent lower than in the 2008 series) and net additions from natural increases average 1.7 million (lower by about 6.5 percent).  Overall, total population growth projected for this period is now 6.8 million less than that which was called for in the 2008 projections.
What does such a large downward adjustment to projected population growth imply about expectations for future household growth?  According to the methodology used in the JCHS’s2010 household growth projections, the new 2012 Census Bureau population projections lead to a new projected baseline household growth trend that is directly between the low- and high- scenarios projected in 2010.
Figure 1: How the New 2012 Census Bureau Population Projections Impact the 2010 JCHS Household Growth Projections
 0111_mccue_figure1
This is because the 2010 JCHS household growth projections considered the 2008 Census Bureau population projections as its high-growth scenario, while the 2010 JCHS low-growth scenario cut immigration levels to half of those in the 2008 Census series resulting in population growth even more modest than the new 2012 population projections. Figure 2 shows the differences in adult population and growth between the three different scenarios.
Figure 2: Population Growth in the 2012 Census Population Projections is within the High- and Low- Assumptions used in the 2010 JCHS Household Growth Projections
 0111_mccue_figure2
Immigration remains the greatest source of volatility in population growth projections and population growth volatility is still a major driver of household growth volatility. Therefore, future household growth projections will require a range of sensitivity for potential future immigration levels.
In addition to the new Census population projections, another major consideration within the household growth projection is the rate at which people form independent households (or the headship rate).  The 2010 JCHS household growth projections were based on headship rates that prevailed during 2007-09. Since then there has been some falloff in these rates as the weak economic recovery has been associated with increases in families doubling up and fewer young adults living on their own.  However, assuming headship rates don’t experience a substantial additional falloff, projected household growth levels over the next decade under the 2010 JCHS methodology are not nearly as sensitive to differences in headship rates as they are to differences in population growth projections as shown above.  Applying the rates from 2007-9, as used in the 2010 JCHS household growth projections, results in an estimate of 12.8 million additional households over the 2012-2022 period.  When the more recent 2011 ACS household counts are used instead for headship rates, the estimate falls 3.8 percent to 12.4 million households, which amounts to 40,000 fewer households per year.  A very similar estimate of 12.5 million results from using headship rates based on household counts in the 2010-2012 CPS.  In short, depending on the headship rate assumption used, the updated Census population projections suggest that household growth over the next ten years should fall in the range of between 12.4 and 12.8 million, which represents an increase of between 6 and 9 percent over our previous low series estimate
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