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Is the Baby Bust Finished?

Fertility rates might finally be stabilizing, and a new boom could be just a couple years away

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Americans stopped having babies when the financial crisis hit in 2008.

I exaggerate, of course; nearly 4 million babies were born in 2012. Yet this number was an 8% decline over the pre-crisis level, and this despite a rise in the number of women of peak childbearing age.

When you look at the fertility rate (births per 1,000 women aged 15-44), which takes into account the rise in the number of women in peak childbearing age, the story looks a lot worse. American fertility hit a new all-time low in 2011, at barely 63 births per 1,000 potential mothers, according to the Pew Research Center.

Those of us who are not professional demographers have a hard time conceptualizing “births per 1,000 women,” but the “total fertility rate” is a little easier to understand. This is the total number of children the average woman can expect to have over her lifetime.

In the developed world, the “replacement” total fertility rate is 2.1 babies per mother. By this measure too, American fertility had sunken to new recent lows at 1.9 babies per mother. As I wrote last year, the American birthrate — long the pride of red-meat-eating Americans — is below the level of France. France!

If you’ve read my work for any length of time, then you know I believe this trend to be temporary. The baby boomers of the 1950s and 1960s had a baby boom of their own in the 1980s and early 1990s. Now this generation — alternatively called the “Millennials,” the “Echo Boomers” or “Generation Y” — are entering their family formation years, and you can expect another baby boom as a result.

The sheer number of potential mothers makes it all but inevitable.

New birth data suggests that the post-crisis baby bust might be ending. Preliminary data for 2012 shows that births and the birth rate are essentially unchanged from 2011 after declining every year since 2007.

This is a big deal. And let me tell you why:

Children and family formation have a massive, disproportionate effect on the economy. There are the obvious beneficiaries — makers of everything from diapers to baby formula to cribs — but the most important effects show up elsewhere.

Consider housing. Before my first son came along, I was living the life of a frivolous urbanite, renting an uptown apartment and happily avoiding the responsibilities of homeownership. Today, I own a house in the suburbs … along with the mortgage albatross hung around my neck. I even have a tree swing in the front yard, and a bouncing house with a slide in the back.

The point here should be clear: An uptick in the birthrate should mean a boom in the starter home market, which in turn means a return to normalcy for banks. This is a sustainable, virtuous cycle that has yet to really begin. Get ready for it.

Less directly — though by no means less importantly — are harder-to-quantify metrics such as productivity. I’m more productive that I was pre-kids. I have no choice. I have hungry mouths to feed.

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