The Economy is Hurting Birth Rates, Less Births are Weakening the Economy

The economic slowdown is taking a toll on the U.S. birth rate, and vice versa. According to data from National Center for Health Statistics, the number of births last year at 4 million was the fewest since 1999.

“American families — whose finances have been hurt by high unemployment, falling home prices and low pay raises — lack confidence to plan for ‘explosions in spending’ required by a new child,” says Peter Francese, a demographic- trends analyst in Exeter, New Hampshire, for the MetLife Mature Market Institute. He predicts U.S. births may not recover until 2013.

This is likely to affect the housing market (NYSEARCA:IYR) down the line, as “more households will likely choose to rent for longer periods of time, and there will be fewer trade-up buyers. I fear this is a trend that will likely persist,” says Mark Vitner, senior economist at Wells Fargo Securities LLC.

The fall-off in births is partly an offshoot of the housing slump. States with the largest economic declines in 2007 and 2008 were most likely to have relatively large declines in babies from 2008 to 2009, based on an analysis in October by the Pew Research Center. Arizona, Florida, Georgia and Nevada all suffered falls in birthrates that were worse than the U.S. average. Housing prices in these states’ all fell more than the national average in the past three years, according to S&P/Case- Shiller home-price indexes. Definitely some correlation there!

In another part of the economy, fewer moms could affect the fortunes of companies that make diapers, strollers, baby car seats and other infant products. Sorry Johnson & Johnson (NYSE:JNJ).