Negative Population Growth, Inc., has issued a November report warning that America is no longer making enough babies to keep pace with deaths. The report blames, the ‘baby bust’ phase on the millennial generation (1980-2000), who are having children at record low rates.
Their attitudes towards marriage, procreation, and materialism changed dramatically after the Great Recession when the economies of the world came to a screeching halt. After a decade of excessive monetary policy from the Federal Reserve. The millennials have been forced to take out an excessive amount of debt such as auto loans, consumer debt, and student loans in an era of wage stagnation. This has fundamentally changed the game for millennials and perhaps changed the course of the United States. The implications of falling birth rates in a low growth economic environment coupled with massive amounts of debt - is a perfect storm that will lead to the next crisis.
Falling birth rates in the United States have been classified of what some call the ‘baby bust’. Like any bubble, there must be a bust cycle and when it comes to births in the United States — that time, is now. According to the report, some demographers are “freaked out by the falling birth rate, an occupational hazard for people who spend their professional lives scrutinizing population statistics”. As the demographic winds shift, the United States is preparing for a ‘Japanification’ period of lower birth rates and a much old generation to strain the economic and healthcare systems.
According to the Centers for Disease Control and Prevention, the number of babies born declined by 338,000 or 8.7% between 2007 and 2016. Over the period, the national fertility rate declined from 69.3 to a historic low of 62.0 in 2016. For more color, the peak was in 1960 at 118 after World war II, ever since it’s been in decline.
As a result, the national fertility rate (all ages) broke a bearish flag (chart below) and fell -11% between 2007 and 2016. To keep pace with deaths, moms need to have 2.1 births, but that is not the case today with 1.8.
“The fertility rate decline is driven entirely by millennial mothers in their teens and twenties,” said the report.
“Birth rates for all age groups of women under 30 fell to record lows in 2016,” it added.
Besides poor economic conditions and a transitioning economy, the report added the increased “availability and effectiveness of sex education and contraceptives for males and females” have played a large role in reducing the birth rate for millennials.
Despite demographers freaking about out by the falling birth rates, the report offers an insight into how others are dealing with the negative trend,
Economists, however, have made peace with the notion that a shrinking population is not necessarily a bad thing. While GDP may slow, a better measure of the country’s economic health – GDP per capita – can benefit.
This is especially relevant in a world where robots, AI, and other technologies threaten the jobs of many Americans
The United States is not alone in the demographic shift of less birth rates, as it’s evident below. Major developed economies and emerging growth economies are feeling similar pain.
The report says “we have been here before” relating today’s economic-stress to the 1930s and the late 1970s coinciding with ultra low brith rates for the younger generation. Interesting enough, the report asks: Is it different this time?
As the paper suggests– it is different and millennials are increasingly delaying kids or just outright abandoning altogether.
The report lists four reasons why this time is different:
- A 2016 study of Census data from Pew Research found nearly one-third of young adults (ages 18-34) live with their parents, slightly more than the proportion that live with a spouse or partner. Not since record keeping began in 1880 has living at home for this age group outpaced living with a spouse. “They’re concentrating more on school, careers and work and less focused on forming new families, spouses or partners and children,” Richard Fry, lead author of the Pew report, said of millennials. Although student debt is often blamed, it may not be the dominant factor: the trend is stronger for those without a college education.
- When it comes to marriage, millennials say “I don’t” more than any previous generation. Research by the Urban Institute finds that if current trends continue, 30.7% of millennial women will remain single by age 40, approximately twice the share of their Gen-X counterparts. The data show similar trends for males. Marriage rates fell drastically during the Great Recession, but they had been declining for years prior to that event. At this point even a return to pre-recession levels will not prevent marriage rates among millennial women from falling below those of Gen-Xers by age 40.4 Ironically, the aversion of millennial females to marriage may reflect their economic strength vis a vis males: “Sharp declines in the earning power of non-college males combined with the economic self-sufficiency of women — rising educational attainment, falling gender gap and greater female control over fertility choices — have reduced the economic value of marriage for women.”
- A cross-generational study conducted at Wharton School of Business found more than half (58%) of millennial female undergraduates do not plan to have children. That is nearly three-times the 22% of Gen-X female undergraduates who did not want children when surveyed in 1992. Results were similar for male students. (The researchers compared surveys of the Wharton graduating class of 1992 and 2012.) While Gen-X women felt “motherhood fulfilled their need to help others” millennial females believe they can serve the greater need by succeeding at work. For millennial men “doing good” is increasingly connected to creating greater balance between work and family. Not surprisingly, they are less likely to think of themselves as the sole breadwinner. Even millennials who do want children say they do not see a clear path toward it.
- Immigrants are the wild card. They account for 15% of U.S. millennials, up from 6% of the prior generation.8 Although birth rates for foreign-born millennials are generally above those of native-born, a recent study by the Center for Immigration Studies finds that the gap is narrowing.9 From 2008 to 2015: birth rates for foreign-born women ages 15 to 19 fell 50.6% versus a 43% drop for native-born in that age cohort; birth rates for immigrant women 20 to 24 fell 40.5% versus a 28.5% decline for native-born. The Total Fertility Rate – a measure of the number of children a woman can be expected to have in her lifetime based on current patterns – fell 21.5% for immigrant women and 15.4% for native-born women over that period. The implication is clear: When it comes to family size, immigrant millennials have embraced the “smaller is better” ethos of the larger, native-born millennial community. That is good news to those of us who believe a smaller population is in the national interest.
Welcome to the new normal: Millennials will be the first generation that the American dream will most likely not be attainable, as show on the home ownership rate below. Since the real estate boom of the 2000s, homeownership rate for people under thirty-five has literally fallen off a cliff. The report explores a number of factors of why this trend exists: student debt and the lingering impact of the Great Recession…
Another new normal: With the introduction of Uber and Lyft fewer millennials are driving– leading to a shake up in the auto industry. The conventional wisdom among automakers are that millennials will unlock a new tranche of demand, but that narrative is going cold as the sharing economy disrupts.
Meanwhile, General Mills in 2016 ran a national advertising campaign targeting the millennial generation titled: ‘make more babies’… The type of conditioning is self-evident of one large corporation that is clearly aware of the low birth rate trend.
The Washington Examiner sums it all up,
The report explains the shift to smaller families is driven by the poor economy, broken American Dream, and job losses millennials witnessed growing up.