In 2009, the only US state in which births rose was North Dakota, where the energy boom kept the economy relatively insulated from the recession, demographer Gretchen Livingston tells The Economist.
The recession has had a drastic impact on US birth rates, and there are also fewer immigrants. Both these things have brought down population projections substantially, according to the latest population projection from the Census Bureau. This has far-reaching implications for already unwieldy programs such as Social Security, where fewer and fewer workers will be tasked with paying for a comfortable retirement for Baby Boomers.
But there may be something else afoot, The Economist's Grep Ip posits:
Structural as well as cyclical factors are at work. Mark Mather of the Population Reference Bureau, a research outfit, notes that couples have been getting married ever later in life; in 2011 the median age at first marriage was 28.7 and 26.5 for men and women respectively, the highest on record. A rising share of women in their early 40s are childless. In this respect America may be following the experience of Europe.
At any rate, the implications are clear. The US will look a lot grayer in the coming decades.
Demographics is destiny, the saying goes. And that will also be important for investors to keep in mind in the coming years. Some argue that the aging of the US is one reason why US interest rates could stay remarkably low for quite some time.
This is for two reasons. Baby Boomers, whose retirement earnings hold significant sway in financial markets, will increasingly be looking for safe investments that pay some interest. That means, basically, bonds. And a key source of those bonds is consumer credit, and the activities that generate consumer credit — starting families and buying cars and houses, for example — are decidedly youthful. Fewer families could mean a much skimpier supply of investment assets — such as mortgage backed securities — for bond investors to own. Higher demand for bonds from oldsters + a lower supply of bonds from youngsters = higher prices, which means lower yields. So that's another reason — besides the Fed, and its latest round of quantitative easing — that low yields will be with us for some time.
This article is from the archive of our partner National Journal.
This article is part of our Next America: Communities project, which is supported by a grant from Emerson Collective.
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