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Millennials are having fewer children than previous generations, a fact that could hold back economic growth for more than a decade.
Some childless millennials are using the money they would have spent on childcare to splurge on luxury vacations, fancy boats, and other luxuries popular among DINKs. Some people may be unfazed by such things.
But such spending won’t be enough to offset the economic impact of a declining population in the long run, especially given that the U.S. birth rate has collapsed over the past half-century, economists told Business Insider. Told.
According to the Centers for Disease Control and Prevention, there were only 11.1 births per 1,000 people in 2022. This is a 53% plunge compared to the record set in 1960, when births per 1,000 people were 23.7.
James Pomeroy, global economist at HSBC, said the infant shortage has become particularly acute since the pandemic. He estimates that the national birth rate is currently falling by about 2% each year, but did not rise in 2023 as experts had originally predicted.
This leaves the United States, like countries like China, where population declines are so severe that governments shell out cash to persuade people to have more children, that their population levels will remain “very low” in the long run. You are at risk of falling into a situation.
“What you’re talking about is that the birth rate has fallen to a very low level, and over time that’s going to have a huge impact on the economy,” Pomeroy said. “And when he gets to 2030, the birth rate is going to be very different than he envisioned at the beginning of the decade.”
The effects of having fewer children for millennials are likely to be even more severe than those for aging boomers, with the most dire consequences likely to occur 10 to 15 years from now, Pomeroy says. He estimated. He pointed to Japan, whose birth rate in the 1990s was similar to that of the United States today. About a decade later, the country’s economy experienced its “worst” growth, when the workforce shrank and gross domestic product (GDP) growth was negative for several years.
According to former White House economist Todd Buchholz, the decline in the U.S. birth rate could reduce gross domestic product (GDP) by 1 to 2 percentage points each year. He estimates that this would be equivalent to cutting U.S. growth by a third over several decades, or erasing the estimated productivity gains from artificial intelligence. Mr Pomeroy warned that in the worst-case scenario, GDP growth could plummet by 3 to 4 percentage points.
Fewer Americans born means fewer workers in the economy.
“I find it even more difficult to find someone at the hospital to cut my hair, do my nails, or set up an X-ray machine,” he says. “So a significant population decline becomes a problem.”
Declining birth rates also mean it will be harder for baby boomers, especially as they age and retire, to bear the brunt of Social Security payments. Baby boomers are estimated to place the “greatest burden” on the U.S. economy in 2029, when all boomers will be 65 or older.
Buchholz added: “There will be enormous challenges figuring out how to pay for retirement. The promised retirement benefits for seniors, Medicare and Social Security will be in huge deficits.” .
If birth rates don’t rise soon, he estimates there will eventually be two full-time workers for every retiree, up from about 20 in the 1930s.
“It’s not sustainable at all,” he said.
negative spiral
Convincing people to have children is difficult.
Pomeroy and Buchholz noted that once birth rates begin to decline in developed economies, the trend generally continues. This is also the case in China and Russia, which have dealt with low birth rates for decades but are now held back by population problems.
Government policies that support people with children may be one way to increase birth rates, or at least prevent further declines in birth rates. Pomeroy said increasing the supply of housing, which could push down soaring home prices, would also help, but it would likely take decades to build up enough inventory to meet demand. .
The most important thing to encourage people to have more children may be to change the culture of how we talk about children, Buchholz says. He noted that there’s a lot of talk among millennials about how much money they can save by not having children. $500,000According to a CNBC analysis.
In the United States, rising costs for everything from shelter to health care to education are weighing on young people’s decisions to have children. Add to that the existential uncertainty caused by everything from the climate crisis to technological upheaval such as artificial intelligence, making decision-making difficult.
“When you have to choose between having a baby and investing in a new Sony PlayStation, I think having fewer children is a net negative,” Buchholz told Business Insider. “It seems crass, vulgar, and inhumane for people to admit that they do that now, but people will openly say that it costs money to have children.”
While many DINK couples say they don’t regret their lifestyle choices, Buchholz speculates that their disrespectful behavior, much to the outrage of their critics, may be the problem itself. did.
“At the end of my life, I was surrounded by machines giving me oxygen, nurses, lawyers.” That seems like a very gruesome way to end a life,” Buchholz said. “So I think the narrative needs to change. So it’s not a fear of missing out on life or of only living once. People who have children feel like they’re living more than once. .”