The baby bust we all know is getting worse in ways that aren’t yet widely understood.
The birthrate, which has been declining for decades, has fallen further during the coronavirus pandemic. And the decline has continued since then, according to a report issued to clients by James Pomeroy, global economist at London-based bank HSBC. The title is “Baby Bust Intensifies: How Worse Will It Get?” (Sorry, no link.)
Mr. Pomeroy did not wait for official data collection agencies such as the United Nations to collect data trickling in from national statistical agencies. He went out and collected the numbers from them himself. Some are provisional, some don’t fully cover the period up to the end of 2023, and “some have been produced from behind the scenes in the Government Statistics Office, which is very interesting,” Pomeroy told me in an email. I wrote it in
While the final numbers may vary slightly, the message in the chart below is unlikely to change, and the chart itself has been updated slightly from what was published in the bank’s report. In most countries for which Pomeroy had access to data, total births continued to decline significantly in 2023. The US fared better than most countries, with a decline of 1.9%. The Czech Republic, Ireland and Poland all experienced declines of more than 10%.
For Pomeroy, the most “staggering” decline is South Korea’s 8.1% decline, since South Korea already had the world’s lowest total fertility rate in 2022 at 0.78. (The total fertility rate is the number of children a woman would have in her lifetime if she experienced the fertility rate she currently experiences in each year of her life.) (the total fertility rate required to )
In South Korea, the declining birthrate has become a national emergency, and experts say that if the decline continues, the country’s population could decline by two-thirds by the end of this century. South Korean newspapers are filled with articles about closing daycare centers, expanding infant allowances, and whether women will need to be drafted into the military to meet quotas.
Pomeroy said if South Korea’s birth rate could fall this much, it’s “plausible” to think that it could also happen in other countries, including the United States, where the total fertility rate is still just above 1.6. said. The US population continues to grow slowly, primarily due to immigration.
The reason why protecting your baby’s breasts is so difficult is because the effects become more complex with each generation. If there are fewer births in one generation, fewer women will give birth in the next generation. A smaller population may reduce the burden on the environment, but if the population pyramid is turned upside down, there will be too few young people working to support the elderly as they retire.
The politically desirable solution to declining birth rates is simply to increase the birth rate. However, pronatalist policies such as birth bonuses and free childcare have failed to meet expectations in the regions where they have been tried. If birth rates cannot be raised, policymakers are left with less attractive options, such as raising taxes, raising the retirement age, cutting retirement and elderly health benefits, or increasing immigration. become.
The last option, increasing immigration, has many effects. It benefits both receiving and sending countries. People who go abroad to work send money back to their home country. You may even come away with new business ideas. Pomeroy said the Philippines has a small but growing startup culture that seems to be fueled by Filipinos who have worked abroad.
The challenge for wealthy countries with low birth rates is to integrate new arrivals economically and socially. This will require public support for investments in housing, education, and other things immigrants need. In the United States, a nation of immigrants, support for immigration remains fairly strong despite the turmoil at the southern border. But as this graph shows, that trend is less pronounced among older Americans.
Pomeroy sees this graph as potentially good news. If today’s young people continue to be as pro-immigration as they get older than they are now, which is not a sure thing, the United States (and perhaps other wealthy countries) will increasingly accept newcomers. This will improve the problems caused by the declining birth rate. .
I don’t mean to downplay how chaotic immigration is today. More needs to be done to stop unauthorized immigration and bring the processing of prospective migrants under control. But if allowed, more legal immigration would help fill shortages in low-wage jobs such as agriculture, food service, construction and personal care, says Global Immigration at the University of California, Davis. said Giovanni Peri, director of the center. . (I support restructuring such jobs to make them more productive and higher paid, but they would still appeal primarily to immigrants from low-income countries.)
A generation from now, if current trends continue, people might look back to 2024 and wonder why Americans were so desperate to keep people out instead of begging them to come in. unknown.
Also Read: Fed Quietly Tightens Monetary Policy
The thin line on this chart indicates that on paper, the Federal Reserve has not raised the federal funds rate, the main interest rate controlled by the Federal Open Market Committee, since July. The dark line actually shows that borrowing continues to become more expensive. That’s because the inflation rate is falling.
When inflation is high, borrowers can use inflated dollars to repay loans, lowering the real cost of borrowing. Case in point: The real federal funds rate was very low (significantly negative) in early 2022 because inflation was high while the nominal federal funds rate remained near zero.
Two things have happened since then. The Fed sharply raised the nominal federal funds rate, and inflation fell sharply. These combined effects have pushed the real federal funds rate up by nearly 8 percentage points, a large swing that could threaten economic expansion.
quote of the day
“The Hobbits took pleasure in such things, if they were accurate. They liked books that presented what they already knew in a fair and consistent manner. ”
— JRR Tolkien, The Lord of the Rings, Part I: The Fellowship of the Ring (1954)