The U.S. Birthrate Has Plunged 53% Since 1960. An HSBC Economist Is Sounding The Alarm

Millennials are having fewer children than their parents did. While that might work for their personal budgets, experts warn it could drag the economy down for decades.

James Pomeroy, a global economist at HSBC, paints a grim picture. “What you’re talking about is these birth rates dropping to very, very low levels, which over the course of time has huge impacts on the economy,” he told Business Insider. The U.S. birthrate has fallen dramatically – just 11.1 births per 1,000 people in 2022, a 53% drop from 1960. And it's still dropping, around 2% each year.

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Why do fewer kids mean trouble? Lower birthrates mean fewer workers in the economy. That has a ripple effect. Todd Buchholz, a former White House economist, explains the challenges. “You find it more difficult to find somebody to cut your hair, do your nails, work on, set up the X-ray machines at the hospital,” he said. “The sheer decrease in the number of people … becomes a problem.”

Social Security is another big issue. By 2029, all baby boomers will be 65 or older, putting massive pressure on Medicare and Social Security. Buchholz says the system isn't ready. “We will have a great deal of trouble … figuring out how to pay the retirements. The promised retirement payments for senior citizens … are going to go in vast deficits.”

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According to Buchholz, in the 1930s, there were 20 workers for every retiree. If trends continue, Buchholz says the ratio could drop to two workers per retiree. “That is simply not sustainable,” he warns.

The cost of living is a major factor for millennials. From housing to education, everything is more expensive. Some millennials are opting out of parenthood entirely. Many are part of the DINK (dual income, no kids) lifestyle, choosing to spend their money on vacations, hobbies and luxuries instead of raising children.

Pomeroy says cultural attitudes also play a role. “I think it’s a net negative to have fewer children when the choice is between having a child and investing in a new Sony PlayStation,” he said.

Buchholz agrees, adding that society needs a mindset shift. He suggests reframing the narrative around children. “People who have children feel that they live more than once,” he said, highlighting the fulfillment that family can bring.

So what's next? Fixing this problem won't be easy. Government policies like housing reforms or financial incentives could help. But experts say it'll take a long time to see results. America faces a future with fewer kids, fewer workers and tough economic challenges ahead.

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