Why a Falling Birth Rate Is a Big Problem

  • Karpal Singh, always in the pursuit of justice
    Karpal Singh, always in the pursuit of justice

    Karpal Singh – the prominent lawyer, lawmaker and DAP leader – died early this morning in a road accident while on the way to Penang, doing what he does best: going to court for a client. He was 73.His reputation as a lawyer and politician had earned him the nickname the "Tiger of Jelutong" from the time he started legal practice in 1970 –... …

  • Farewell, Tiger of Jelutong
    Farewell, Tiger of Jelutong

    GEORGE TOWN, April 17 – Today, the nation woke up to the shocking news of the death of Karpal Singh. This man who has been part of Malaysia’s political landscape for so long and who has overcome... …

  • Mini-sub completes first full mission in hunt for MH370
    Mini-sub completes first full mission in hunt for MH370

    A mini-submarine hunting for wreckage of missing Malaysian airliner MH370 has completed its first full mission at the third attempt, officials said today, as seabed data it retrieved was being analysed. The first two attempts to scan the deep Indian Ocean off western Australia failed to produce any results. The first dive began Monday night... …

  • Tears flow as Karpal’s body arrives at Ipoh hospital
    Tears flow as Karpal’s body arrives at Ipoh hospital

    Tears flowed as Bukit Gelugor MP Karpal Singh's body arrived at the Raja Permaisuri Bainun Hospital in Ipoh, Perak, at 7.25am today for a post-mortem following an accident near Gua Tempurung in Perak, early this morning. His wife Gurmit Kaur, sons Jagdeep Singh Deo and Gobind Singh Deo, and daughter Sangeet were joined by DAP secretary-general... …

  • Karpal killed in accident, son injured
    Karpal killed in accident, son injured

    Veteran opposition MP and lawyer Karpal Singh was killed in an accident near Gopeng in Perak this morning. …

  • Families of MH370 passengers reveal unanswered questions’ list on social media, says CNN
    Families of MH370 passengers reveal unanswered questions’ list on social media, says CNN

    Families of passengers aboard missing Malaysia Airlines flight MH370 yesterday released a list of questions that they said authorities have so far left unanswered, as the search enters into day 41 without any sign of wreckage from the aircraft. CNN reported that the 26 questions focus on technical issues involving emergency locator... …

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.

  • ‘Huge’ Hindu, Buddhist statues against Islam, ex-judge says The Malay Mail Online
    ‘Huge’ Hindu, Buddhist statues against Islam, ex-judge says

    KUALA LUMPUR, April 16 — The “huge” statues at a Hindu temple in Batu Caves and Buddhist temple in Penang are an affront to Islam as the religion forbids idolatry, a retired Court of Appeals judge... …

  • Wreck hunter confident MH370 crash site found, says Aussie paper The Malaysian Insider
    Wreck hunter confident MH370 crash site found, says Aussie paper

    A wreck hunter is confident that the search teams had pinpointed the crash site of Malaysia Airlines flight MH370 and believes that the black boxes will be located soon, the Sydney Morning Herald (SMH) reports. David Mearns, director of Blue Water Recoveries told the ABC's 7.30 programme yesterday, he was confident that, because of their... …

  • One dead as S. Korea ferry with 476 passengers sinks AFP News
    One dead as S. Korea ferry with 476 passengers sinks

    South Korea's coastguard said Wednesday one person had been killed as it struggled to rescue 476 people -- mostly high school students -- aboard a ferry that ran aground and sank off the southern coast. "The ferry is almost completely submerged," Lee said, adding that a detachment of South Korean Navy SEALS were taking part in the rescue. Of the 450 passengers on board the ferry bound for the southern resort island of Jeju, 325 were students from a high school in Ansan, south of Seoul. The …