Economists' Latest Leading Recessionary Indicator: Sex

When it comes to unorthodox indicators of the business cycle - especially when the business cycle is the second longest in history such as this one - economists have always had creative ways of "calculating" where in the cycle we are at any given moment.

Starting in the 1926s, economist George Taylor came up with the "hemline index" which suggested that the length of women’s skirts tracked stock market performance — rising and falling in tandem. In good economies, we get such results as miniskirts while in poor economic times, as shown by the 1929 Wall Street Crash, hems can drop almost overnight.

Several decades later, former Fed chair Alan Greenspan used to track sales of men’s underwear, which he said fell at the onset of recessions as men delayed buying new underwear during tough economic times.

Then there was the lipstick index proposed by Estée Lauder chairman Leonard Lauder in 2001: he claimed that purchases of cosmetics were inversely correlated with the health of the economy (the idea was later discredited). The 2008 recession gave rise to the tie index, sales of which, it was claimed, rise as employees fear for their jobs.

Now, according to new research there is a new indicator that can warn of a coming recession: sex, or rather the 9 month consequences thereof: the rise and fall of pregnancies.

According to a paper paper published on Monday by the National Bureau of Economic Research, ahead of the past three US recessions, the number of conceptions began to fall at least six months before the economy started to contract. As the FT notes, while previous research has shown how birth rates track economic cycles, the scientific study is the first to show that fertility declines are a leading indicator for recessions.

Speaking to the FT, Daniel Hungerman, economics professor at the University of Notre Dame and one of the report’s authors, said it was “striking” that the drop in pregnancies was evident before the recession that came after the 2007 financial crisis, since it has traditionally been argued that this slump had been hard to predict.

It may be difficult for "experts" but apparently not for a couple deciding what to do next in the bedroom.

The analysis used data on the 109 million births in the US between 1989-2016 to examine how fertility rates changed through the last three economic cycles — in the early 1990s, the early 2000s and the late 2000s. A similar pattern emerged in all three cases.

The researchers focused on birth data from the National Center for Health Statistics, looking at clinical estimates for the month of conception. They compared that to the dates of the recessions, as calculated by the NBER, and to changes in the GDP. The change in birth rates was driven by a drop in conceptions, not an increase in abortion or miscarriage, the researchers found. In other words, less sex with the intent to procreate. 

“One way to think about this is that the decision to have a child often reflects one’s level of optimism about the future,” says Kasey Buckles, another Notre-Dame professor and co-author of the study. Research published through the NBER is often conducted by academics at their own universities.

To the researchers' surprise, they found that falls in conceptions were a far better leading indicator of recessions than many commonly used indicators such as consumer confidence, measures of uncertainty, and purchases of big-ticket items such as washing machines and cars.

“None of the experts saw it coming and in its first few months many business leaders were convinced the economy was doing OK,” he says. The fertility statistics told a different story.

Take the Great Recession. The U.S. birth rate, rising before the recession, fell in 2008, as one might expect. But back up before that — to the middle of 2007. The subprime mortgage crisis was hurting the housing market, but the broader effect on the economy was not yet apparent. As the NPR notes, stock prices kept hitting all-time highs. Unemployment was below 5 percent. Analysts were confident, optimistic. In July, the chief economist of Standard & Poor's told NPR listeners that "the rest of the economy so far has been ignoring the housing crisis very nicely."

It was months before the recession began, as NBER later calculated it, and more than a year before the collapse of Lehman Brothers triggered a global panic.

But, the researchers found, the U.S. conception rate had already started to drop.

"That's what makes our results surprising," Buckle says. "While the best of the experts didn't see the Great Recession coming, it seems that families and households were feeling those tremors and responding to it."

The researchers suggest several possible explanations, including the natural time lag with attempting to conceive, the increasing age of first-time mothers and the growing popularity of long-acting birth control.

* * *

To be sure, this may be just another case of spurious correlation, especially now that the Fed has killed the business cycle. Indeed, researchers admitted that the correlation between conceptions and recessions is not perfect, and there have been periods when conceptions have fallen but the economy has not.

Professor Buckles said: "It might be difficult in practice to determine whether a one-quarter drop in conceptions is really signalling a future downturn. However, this is also an issue with many commonly used economic indicators."

So what does the latest data indicate? Well, as the chart below shows, after peaking in some time in 2013, the US is now deep in its latest recession, at least based on pregnancy rates. Ironically, it is now up to the NBER - the author of the paper - to determine if that is indeed the case.


All Risk No Reward Oldwood Thu, 03/01/2018 - 01:58 Permalink

"Business cycle" is a Money Power Monopolist euphemism to dupe their helot debt-money slaves.

It is a debt-money bubble bust operation, the only difference between them is the magnitude of bubble, which then defines the magnitude of the bust.

“This Act establishes the most gigantic trust on earth.…When the President signs this Act, the invisible government by the Money Power, proven to exist by the Money Trust Investigation, will be legalized.…The money power overawes the legislative and executive forces of the Nation and of the States. I have seen these forces exerted during the different stages of this bill.…”
~Congressman Charles A. Lindbergh, referring to the act which established the Federal Reserve. Congressional Record, Vol. 51, p. 1446. December 22, 1913.         

“The new law will create inflation whenever the trusts want inflation. It may not do so immediately, but the trusts want a period of inflation, because all the stocks they hold have gone down... Now, if the trusts can get another period of inflation, they figure they can unload the stocks on the people at high prices during the excitement and then bring on a panic and but them back at low prices.…The people may not know it immediately, but the day of reckoning is only a few years removed.”
~Congressman Charles A. Lindbergh, referring to the Federal Reserve act, Congressman Lindbergh stated this a few years prior to the stock market crash in 1929 which ushered in the Great Depression Congressional Record, Vol. 51, p. 1446. December 22, 1913.

“The new law will create inflation whenever the trusts want inflation. From now on depressions will be scientifically created.”
~Congressman Charles A. Lindbergh, after the passage of the Federal Reserve act 1913.

History what?  Repeats?  Or do the Money Power Monopolists simply run the same game on the hapless duped masses?

In reply to by Oldwood

JuliaS Oldwood Thu, 03/01/2018 - 03:49 Permalink

If conception was a leading indicator for economic growth, China, India and Africa would've been 1st world superpowers.

Article is utter BS. What's next thing you know, they'll be saying climate change is caused by hockey stick graphs and Bernanke's lack of hair is the sole reason for ZIRP.

In reply to by Oldwood

esum dognamedabu Thu, 03/01/2018 - 09:28 Permalink

NEW YORK   — A study by the Department of Health and Mental Hygiene has found that large parts of the city are plagued with soaring rates for multiple STDs – including HIV/AIDS.

The study surveyed 181 city ZIP codes for concurrence in rates of HIV/AIDS, chlamydia, gonorrhea, syphilis and hepatitis B, as well as two non-sexually-transmitted diseases – hepatitis C and tuberculosis. The diseases often occur among the same populations, the study noted. Spread em bitch..... second thought please dont...

In reply to by dognamedabu

Miffed Microbi… Wed, 02/28/2018 - 23:53 Permalink

My supervisor is pregnant with her first child. I feel such empathy for her because she and her husband are alone with no family support as my husband and I were. She recently found out child care for her baby will be $2000/ month. What a nightmare for a young family. 



Oldwood NVTRIC Thu, 03/01/2018 - 00:06 Permalink

When I was a kid (60 yes ago) the most common word I heard was NO! My overhead costs were relatively low, a few cheap clothes and plenty of lunchmeat and Velveeta sandwiches.

Today, I don't hear parents saying no a lot. Children have become a competitive wealth display just like houses and cars, and I think many are becoming afraid to say no.

In reply to by NVTRIC

MusicIsYou Thu, 03/01/2018 - 00:01 Permalink

No I think the drop in sex is because people plainly aren't interested. People don't get vasectomies because of recessions either, and I know of plenty of 20 somethings talking about vasectomies. Only a dumb couple would want to have children today with the government knee deep in their raising of their kids anyway. And since it is that only dumb clueless couples would be having kids today, the people having kids are exactly the ones we don't want having kids. But I guess on a good note, dummies having kids will further tear civilization apart.

AGuy Oldwood Thu, 03/01/2018 - 00:23 Permalink

"Smart people" see no future, therefore there will be none. Somehow, for some reason, poor people do see a future."

Nope. People (men) with asset are no longer getting married (They lost most of their assets in Divorce). Western Women have become toxic. They get involved with the badboys\Toyboys in their prime years and they when they hit the wall in their late 30's, they can't find a man with assets to take care of them.

Poor people (men) have nothing to lose by screwing around (no assets to lose), and poor single women use Welfare and generally have more children to collect larger gov't checks.

In reply to by Oldwood

ghengiskhan Thu, 03/01/2018 - 00:14 Permalink

They are misinterpreting it.  This combined with the meteoric rise in STD rates and widespread delusional narcissism is actually the drop you see with a collapsing society.