Americans are having fewer babies. Since 1960, the number of births per thousand people has dropped from just under 24 a year to fewer than 12 today. Put another way, it takes an average of 2.1 babies per adult woman to maintain the current population. Today, in the U.S., this ‘fertility rate’ has fallen to 1.7.
We are not alone. The World Bank, which keeps these statistics for every country, shows a decline pretty much across the entire world, some more drastic than others. The worldwide fertility rate is around 2.4 children per woman, roughly half the 1950 level (4.7).
There are exceptions: a number of African countries, including Somalia (6.1 children per woman) and Niger (6.9), still have rapidly growing populations. But every single European country has a fertility rate below 2.0 (France is highest, at 1.9), and some demographers have called Italians ‘an endangered species,’ with a fertility rate down around 1.3. China’s fertility rate is hovering at around 1.7, while Singapore and Hong Kong are among the lowest, at 1.1.
Is this a beneficial or worrisome trend? It is certainly beneficial in the sense that in the future there will be fewer people consuming the resources of the planet, and one can easily project lower pollution levels if there are fewer people consuming energy and dropping plastic into the oceans. But the declining birthrate could force our society—and others—to make some potentially complicated adjustments. For one thing, fewer babies means fewer future workers to contribute to the economy. At the same time, people are living longer, which means the population balance will shift toward older people. If the ratio of workers to retirees were to tilt too far, there would be major changes in consumption. For instance, healthcare would consume a much higher percentage of the total GDP, and services for the elderly would become a major employer of those younger workers.
And the most straightforward shift is a decline in total GDP—where increases in total production and consumption have historically come from increases in population. The U.S.—and the world—is moving into uncharted territory, and few policymakers seem to be making preparations.
This article was written by an independent writer for Brewster Financial Planning LLC and is not intended as individualized legal or investment advice.