It’s a vicious cycle, evidently. People stop having children because they can’t afford them in a recession, and that just makes things worse.
Debra Mollen, 41, a psychology professor in Denton, Texas, said she and her husband don’t plan to have children as they strive to pay down their mortgage and save for retirement.
“Children are really expensive,” Mollen said, and the 2008 financial crisis shows the importance of building a nest egg. “Retirement is not an option for a lot of folks.”
Mollen isn’t alone, as Americans have had fewer babies each year since the 2008 financial meltdown, with births falling to a 12-year low in 2011, according to the National Center for Health Statistics. The low birth rate and reduced immigration resulted in the smallest gain in population since World War II, which may hurt spending on everything from Huggies diapers to pregnancy kits, child care and education.
“Consumption bumps up when families have children,” said Dean Maki, chief U.S. economist at Barclays Plc in New York, who worked at the Federal Reserve from 1995 to 2000, and researched household finances. “The fact we are seeing fewer births is something of a drag on consumer spending. To the extent this turns out to be a persistent trend, it is something to be worried about.”The population increased by 0.92 percent, or 2.8 million people, to 311.6 million from the end of the decennial population count on April 1, 2010, to July 1, 2011, the slowest rate over a similar period since the mid-1940s, the Census Bureau said.
The number of births fell to 3.96 million in 2011, and it may fall again this year to 3.94 million, forecaster Demographic Intelligence predicted in July. “A culture of risk aversion among young adults” is behind the drop, the Charlottesville, Virginia-based firm said.
“Population is a very strong motivation for consumer spending,” said Chris Christopher, director of U.S. and global consumer economics research at IHS Global Insight in Lexington, Massachusetts. “Weak population growth due to fewer children will play itself out in years to come.”