FORECASTS & TRENDS E-LETTER
by Gary D. Halbert
June 22, 2021

IN THIS ISSUE:

1. US Birthrate Fell To New Record Low Again in 2020

2. Why Are American Women Having Fewer Babies?

3. Falling Birthrates Are Increasingly a Global Phenomenon

4. Kensington Dynamic Growth Webinar June 30 at 3:00

US Birthrate Fell To New Record Low Again in 2020

The US birthrate fell to another record low in 2020, extending a trend which began in the mid-1960s, and this pattern is also happening in most other parts of the world. Just 3.6 million babies were born across the 50 US states, Washington, D.C., Puerto Rico and the Northern Mariana Islands in 2020, according to the Centers for Disease Control and Prevention in May.

The number of new babies born in the United States dropped to its lowest point in more than four decades last year as the coronavirus pandemic and an economic meltdown contributed to a years-long “baby bust” which has demographers worried about future population growth rates. The US fertility rate, the average number of children that would normally be born to a woman over her lifetime, also sank to near new lows in 2020 at 1.8 births.

The latest birth figures represent a 4% decline from final figures for 2019 and is the lowest number of children born since 1979, when the US population was just 224 million people versus just over 331 million in 2020.

The birthrate among women between the ages of 15 and 44, considered in prime childbearing years, fell to 55.8 per 1,000 women, a significant drop from the 58.3 per capita rate in 2019. The number of births in 2020 lagged the number of births in 2019 in all but one month of last year – February, just before the pandemic lockdowns began in the United States.

The number of births fell across racial and age groups, pointing to a widespread decline that is not isolated to just one faction of the population. Birthrates dropped most dramatically among women of Asian descent, and among those young women between the ages of 15 and 19.

The combination of a very low birthrate and a global pandemic which has already killed more than half a million Americans, as well as an immigration system that admitted fewer people than usual in recent years, made 2020 one of the slowest growth years since the Census Bureau started keeping yearly track more than 100 years ago.

Meanwhile, a record 3,376,000 Americans died last year, a whopping 18% more than in 2019, according to research from Kenneth Johnson, a demographer at the University of New Hampshire’s Carsey School of Public Policy. More people died than were born in 25 states last year, five times as many states as experienced a net decline the year prior.

Deaths outpaced births in every state in New England, in most Rust Belt states and even in states that have experienced population increases in recent years like Florida, Arizona, Oregon and Montana.

National birthrates have been falling since 2007, when the United States hit a modern record for the number of babies born. That year, just over 4.3 million children were born in the United States, according to CDC data versus only 3.6 million last year.

Why Are American Women Having Fewer Babies?

Demographers attribute falling birthrates to both economic and social circumstances: In many cases, families opted against having children in the midst and the aftermath of the economic recession of 2008-09, a hangover from which the nation’s birthrate has never truly recovered.

Johnson (mentioned above) has estimated there are about 3 million childless women in the United States, most of whom would have been expected to have children in earlier decades. The reasons are many, as I will discuss below.

Many demographers predicted a ”baby-boom” when COVID-19 forced most families to quarantine at home, but we now know this didn’t happen. In fact, just the opposite. The coronavirus pandemic exacerbated the slowing birth rate as the virus raged through the country, making Americans very unsure what the future held. 

As women have gained more access to education and contraception and as the anxieties associated with having children intensified, more parents are delaying pregnancy and fewer babies are being born.

In surveys, many women cite the high cost of having and raising a child as their greatest concern. Many also said they wanted to get their careers firmly established first and expressed satisfaction that they were exerting control over their fertility – and their lives – in a way their mothers had not.

I should mention that surveys also found most women in their 20s and 30s say they want to have children at some point before the end of their reproductive years, Still, in the past decade, births to women over 30 have not offset the decline for women in their 20s, driving down overall births and leaving an open question: Are young women delaying childbirth or forgoing it altogether? Time will tell.

While this critical trend change has taken years to develop, as noted above, the decline has accelerated over the last several decades. With fewer births, fewer girls grow up to have children, and if they have smaller families than their parents did, the drop starts to look like something falling off a cliff.

For decades, delaying parenthood was mainly the domain of upper-middle-class Americans, especially in big, coastal cities. Highly educated women put off having a baby until their careers were on track, often until their early 30s. But over the past decade, as more women of all social classes have prioritized education and career, delaying childbearing has become a broad pattern among American women almost everywhere.

In surveys, many women cite the high cost of having and raising a child as their greatest concern. Many also said they wanted to get their careers firmly established first and expressed satisfaction that they were exerting control over their fertility – and their lives – in a way their mothers had not.

I should mention that surveys also found most women in their 20s and 30s say they want to have children at some point before the end of their reproductive years. Still, in the past decade, births to women over 30 have not offset the decline for women in their 20s, driving down overall births and leaving an open question: Are young women delaying childbirth or forgoing it altogether? Time will tell.

Falling Birthrates Are Increasingly a Global Phenomenon

All over the world, countries are confronting population stagnation and a fertility bust, a dizzying reversal unmatched in recorded history that will make first-birthday parties a rarer sight than funerals, and empty homes a common eyesore.

Although some countries continue to see their populations grow, especially in Africa, fertility rates are falling nearly everywhere else. Demographers now predict that by the latter half of the century or possibly earlier, the global population will enter a sustained decline for the first time.

Studies sponsored by the United Nations and others estimate that only about one-third of nations and territories around the world still have birthrates of 2.1 or more children – the “replacement rate,” whereas two-thirds of the world is below the replacement rate.

And it is expected to get worse: According to projections by an international team of scientists published last year in The Lancet, 183 countries and territories out of 195 will have fertility rates below replacement level by 2100 or even sooner.

Their model shows an especially sharp decline for China, with its population expected to fall from 1.41 billion now to about 730 million in 2100. If that happens, the population pyramid would essentially flip. Instead of a base of young workers supporting a narrower band of retirees, China would have as many 85-year-olds as 18-year-olds. A staggering thought!

Even in countries long associated with rapid population growth, such as India and Mexico, birthrates are falling toward or are already below the replacement rate of 2.1 children per family. The trend is clear.

Some countries have resorted to paying families to have more babies. Sometimes it’s cash and/or government credits; in others it’s government provided fertility treatments, paid leave, free childcare, etc., etc. But as all are finding, it is difficult, if not impossible, to reverse the downward trend in birthrates.

In summary, there are many dire implications for falling birthrates. The most obvious is a falling global population which means shrinking economies over time – with fewer young people to work and support the elderly. The list is long.

Now, the environmentalist crowd takes just the opposite view: A shrinking global population is good for the planet. Of course, they would take that view despite the negative implications for the global economy in the years ahead.

I will admit, there are some positive aspects to a slowing birthrate and a (possibly) smaller world population which I will discuss in future issues. One of those is the fact that worker productivity is booming, which holds out the possibility (and it’s just a possibility) that we can get along with fewer workers. This remains to be seen, of course.

Finally, I close out this discussion with one interesting fact I ran across: In Japan, they sell more adult diapers than those for babies. Japan’s government is desperate to reverse its falling birthrate and has reportedly spent tens of billions to no avail.

You can read more in the links in Special Articles to follow.

Kensington Dynamic Growth Webinar June 30 at 3:00PM

We constantly look for strategies with low correlations to traditional “buy and hold” passive investment strategies. Recently we added the Kensington Dynamic Growth Strategy to our list of recommended investments. This equity strategy strives to provide investors with the potential to generate stable, above average total returns, with low drawdowns.

Kensington uses a proprietary trend-following model to identify and act on prevailing market sentiment. The strategy is designed for investors who seek equity-like returns but less than half the correlation to equity markets. In times of market weakness, the strategy moves to Treasuries and cash equivalents.

Please join us for this live webinar on Wednesday, June 30 at 3:00PM Central Time. The webinar will feature Jordan Flebotte, Kensington’s Executive Director, who will explain how the Dynamic Growth Strategy works and take your questions following the presentation.

You can register for this free webinar here.

Best personal regards,

Gary D. Halbert

SPECIAL ARTICLES

Americans Aren’t Making Enough Babies to Replace Ourselves

Long Slide Looms For World Population – Ramifications

Gary's Between the Lines Blog: Household Net Worth Soars To Record High In 2021

 

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