Americans aren’t having as many children as they used to, but it won’t be the blow to the U.S. economy that many feared, according to Fisher Investments.
In a recent note, the investment advisory firm highlighted declining birth rates around the world, with the U.S. rate falling last year to its lowest level in several decades. The country has seen the lowest number of births since 1979, according to preliminary data from the Centers for Disease Control.
This continues a long-standing decline in the U.S. birth rate, which has been declining since the 1960s, according to World Bank data.
But fewer babies being born isn’t necessarily a bad thing for the economy, the company said. The birth rate has fallen before without harming growth, such as in the 1980s and 1990s, when the economy was booming despite fertility declines over the previous decade.
A decline in birth rates is also more common in wealthier countries. This is because the country has a lower infant mortality rate and people generally live longer, allowing them to have fewer children and potentially delay their births.
“Yes, the decline in the birth rate could have negative long-term consequences if a real reduction in human capital and other factors do not compensate for this. But this is not a given since many things can change in the near and distant future,” the company added.
Economists say technological advances, like AI, could soften the impact of a smaller workforce. AI could disrupt up to 300 million jobs worldwide, Goldman Sachs estimates. This could mean the economy will do just fine, even with fewer people entering the job market.
Even if the decline in the birth rate does weigh on the economy, it will not immediately affect the market. The burden of a declining population takes years to reveal its full effects, meaning the market and economy are not in danger in the short term, Fisher added.
“Concerns about fewer babies are rooted in the idea that population growth is linked to economic growth (i.e. any slowdown or decline in the former will hurt the latter), said society “For us, this says more about the current state of sentiment: While well-known false fears are attracting attention, skepticism remains quite widespread, suggesting that the wall of concern over the rise of bull markets remain high.
Ken Fisher, the firm’s founder and co-chief investment officer, has been bullish on stocks for months, brushing off market fears about a potential recession and higher interest rates for longer. Stocks are likely still in a bull market, he said, because bear markets typically start with a gradual decline in stocks, not a sudden drop, like stocks experienced last month.
businessinsider
