Why a Falling Birth Rate Is a Big Problem

  • Search for MH370 likely to take years, says US official
    Search for MH370 likely to take years, says US official

    The search for missing Malaysia Airlines flight MH370 is likely to drag on for years, a senior US defence official told Reuters today, as an underwater search for any trace of the plane's wreckage off west Australia appeared to have failed. The official, speaking under condition of anonymity because he was not authorised to comment on the... …

  • Widow sues after insurance declines cancer cover after husband gets cancer
    Widow sues after insurance declines cancer cover after husband gets cancer

    GEORGE TOWN, April 25 ― A widow is suing an insurance firm here for RM2 million after it declined to pay out on her husband’s policy against cancer when he was diagnosed with the disease six months... …

  • In Malaysia visit, Obama revisits the ‘Asia pivot’
    In Malaysia visit, Obama revisits the ‘Asia pivot’

    As the excitement swells ahead of US President Barack Obama’s visit to Malaysia this weekend – if not on the closed-off streets of Kuala Lumpur then at least in the media – there’s also a burgeoning anxiety here inside the Washington beltway that the hope’n’change promised by the so-called “Asia pivot” may need some tempering during this... …

  • Slippery slope, lawyers say of Pahang ban on holy books in hotels
    Slippery slope, lawyers say of Pahang ban on holy books in hotels

    KUALA LUMPUR, April 25 ― A Pahang Islamic body's recent decision to ban hotels from carrying books on non-Islamic religions signals another step on the path towards further erosion of Malaysia... …

  • Families take their doubts on MH370 investigation to Boeing shareholders
    Families take their doubts on MH370 investigation to Boeing shareholders

    Families of passengers on board flight MH370 are now turning to shareholders of aircraft manufacturer Boeing after failing to get any direct answers from Putrajaya and Malaysia Airlines to lingering questions over the investigation into the missing flight. Spearheading the effort is Sarah Bajc, partner of Philip Wood, who was on board the... …

  • PR would have suffered serious losses in 2013 polls if hudud was major issue, says DAP
    PR would have suffered serious losses in 2013 polls if hudud was major issue, says DAP

    Pakatan Rakyat would have suffered devastating setbacks in Perak, Pahang, Negri Sembilan and Melacca if it had made hudud a major issue in last year’s general election, DAP advisor Lim Kit Siang said. The Gelang Patah MP (pic), who had earlier said hudud was never a vote-winner for PAS in previous elections, gave an illustration of how PR... …

It sounds like one of those stories you can safely ignore: The U.S. birth rate has hit a record low, led by a big drop in the portion of immigrant women having babies.

[Photos: Kennedy Center Honors Led Zeppelin, Hoffman, Letterman]

This development doesn't directly affect anybody, since it's one of those long-term societal trends that occurs in small increments and doesn't change the unemployment rate, the price of gas, the direction of the stock market or any of the big economic forces that make our lives better or worse today. And since the trend is strongest among immigrants, it sounds like maybe this is something happening in a shadowy part of the economy that doesn't matter all that much.

But it does matter, and if the trend persists, it could mean lower living standards for most Americans in the future.

It may seem intuitively obvious that a slower-growing or declining population is good for the economy, especially when you think about starving children in poor parts of the world where there's not enough food for everybody. In places where resources are severely limited--and economic policies are dysfunctional--it may be true that a growing population is a bad thing.

But that's usually because such economies are static, and instead of creating wealth they typically just divide up what's already there. That's not the situation in America, which has a dynamic economy that creates wealth and more than enough resources for all of its citizens.

[See: What Keeps People Out of the Middle Class]

On the contrary, one of the great strengths of the U.S. economy, especially compared to Europe and Japan, is a relatively high birth rate, which keep the population young, on average, and population growth robust. "Everybody comes into world with one mouth and two hands," says economist Donald Boudreaux of George Mason University. "It's generally true that most people produce more than they consume."

A growing population is good for the economy when rising productivity continually reduces the amount of resources required to produce a given amount of output. Even now, with the U.S. economy in a rut and too many people out of work, productivity is rising, which means a larger population would generate more wealth per person than a smaller one. Boudreaux points out that Manhattan, one of the mostly densely populated places in America, is also one of the wealthiest, whereas rural states like Mississippi are sparsely populated, and much poorer.

The sizeable drop in the U.S. birth rate, reported recently by the Pew Research Center, has probably occurred because of the struggling economy. Though Pew didn't investigate the reasons behind the decline, birth rates tend to rise and fall based on how optimistic or pessimistic people feel. The U.S. birth rate peaked in 1957 (hence the "baby boom" generation), when the economy was booming and the unemployment rate was about 4.5 percent. It sagged in the 1970s, when inflation and other problems battered U.S. workers. The birth rate stabilized in the 1980s and stayed more or less level, until starting to dip again in 2008.

[Also: How Much Will the Fiscal Cliff Will Cost You?]

Since then, younger Americans have been waiting longer to get married, often because of economic difficulties. Married couples may be waiting longer to have kids, or having fewer kids, for the same reason. While the trends are more pronounced among immigrants, they're occurring throughout the U.S. population.

These types of demographic trends get the attention of economists when big changes might raise or lower the economy's capacity to grow--which could be happening now. Fewer marriages and fewer children lower the rate of household formation, which means people spend less on everything from appliances to clothing. "Fertility rates have plunged, and that will have an impact on future consumer spending," says Nigel Gault, chief U.S. economists at forecasting firm IHS Global Insight.

That trend could reverse itself if the economy picks up for good and Americans become convinced that happier days lie ahead. But for now, a dearth of babies and a limp economy may be reinforcing each other. A few more babies would be good for business.

Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.



More From US News & World Report

Follow @YahooMalaysia on LINE for daily news updates.

Comments on Yahoo pages are subject to our link to Comments Guidelines. You are responsible for any content that you post. Yahoo is not responsible or liable in any way for comments posted by its users. Yahoo does not in any way endorse or support comments made by its users.

  • MH370 passenger’s partner tells of strange email from sacked Fox officer The Malaysian Insider
    MH370 passenger’s partner tells of strange email from sacked Fox officer

    The partner of an American passenger aboard the missing Malaysia Airlines flight MH370 has spoken about how a Fox executive who was recently sacked by the news station had contacted her offering to raise funds on her behalf. Sarah Bajc, whose partner Philip Wood is among the 239 people on board the missing plane, told the Sydney Morning Herald... …

  • My last moments with Pa: Ramkarpal Singh The Malaysian Insider
    My last moments with Pa: Ramkarpal Singh

    A week after the tragic crash that took the lives of veteran lawyer and politician Karpal Singh and his personal aide, Michael Cornelius, his son Ramkarpal recounts the final hours with his father that fateful day. This is his story, as told to V. Anbalagan, assistant news editor. “My parents (Karpal and Gurmit) had gone to Pantai Hospital... …

  • In Disney's shadow, homeless families struggle Associated Press
    In Disney's shadow, homeless families struggle

    KISSIMMEE, Fla. (AP) — When they moved from Georgia to the theme park playground of central Florida four years ago, Anthony and Candice Johnson found work at a barbecue restaurant and a 7-Eleven. Their combined salaries nevertheless fell short of what they needed to rent an apartment, so the couple and their two children have instead been hopping among cheap motel rooms along U.S. 192. …