U.S. Fertility: Down For The Count

Article Provided by Forbes.

The provisional fertility numbers for Q3 2016 are in—and the news isn’t good. General fertility has fallen again, with younger age brackets showing the steepest declines. While some demographers are convinced that birthrates will rebound when Millennials grow older, this risk-averse generation may continue to dash fertility expectations. Other demographic indicators (namely, Hispanic and immigrant birthrates) also point to lower U.S. fertility. All told, it looks like the expected baby bump has been bumped—again.

According to the National Vital Statistics System, the general fertility rate (GFR: births per 1,000 women age 15-49) fell from 62.3 in Q2 2016 to 62.2 in Q3 2016. This comes after 2015’s full-year GFR dropped to 62.5—matching 2013’s all-time low. The results aren’t any more reassuring broken down by age. Since Q1 2014, birthrates have fallen 18% among 15- to 19-year-olds, 6% among 20- to 24-year-olds, and 2% among 25- to 29-year-olds. The decline in the 25- to 29-year-old birthrate is particularly disappointing, considering that this age bracket historically has posted the highest rate. To be sure, birthrates over age 30 have risen somewhat: They’re up 4% among 30- to 34-year-olds, 5% among 35- to 39-year-olds, and 7% among 40- to 44-year-olds.

The overall birthrate is gradually falling because the percentage drop in birthrates under age 30 is larger than the percentage rise in birthrates over age 30. Keep in mind that under-30 age brackets have always accounted for the most births, though the margin has been shrinking over time.

So powerful is this fertility downdraft that it is overwhelming good news in the economy that should be pushing births back up. Real median household income rose by 5.2% in 2015, the biggest rise ever recorded by Census and the first rise since the Great Recession. But it’s been over nine months and the economic boost isn’t showing up in the birthrate. In fact, the steeper birthrate decline in Q3 2016 very well may be a reflection of a worsening economy in late 2015. Any optimism from the full-year median income boost has already been spent. Fertility forecasters, who rely heavily on economic modelling, are once again getting faked out.

So where do we go from here? Will U.S. fertility rebound—or will we continue to experience a decline? There are two schools of thought.

The optimists point to what demographers call the “tempo effect.” This is the observed fact that fertility declines are often followed by fertility rebounds, since women who defer having babies for a few years (say, during times of recession or war) often make up for it by having more babies later. They thereby meet their original family-size goal. Maybe that’s what’s happening to Millennials, though in their case the tempo effect refers less to a temporary adverse event than to a generational shift to a later age of birth. Clearly, say the optimists, we have already seen this happen to some extent with Boomers and Generation Xers.

The pessimists, on the other hand, say there’s been a modest decline in family-size expectations, suggesting that Millennials don’t want to end up with families that are quite as large. More importantly, they point out that a generation’s realized lifetime fertility includes millions of parents who undershoot their goal and millions who overshoot. And Millennials—here’s where their risk aversion is key—have been especially effective at eliminating overshooting. Witness the outsized recent declines in fertility under age 25, as well as the declines in unintended pregnancies and abortion rates in those age brackets. According to the pessimists, Millennials will widen the gap between lifetime expectations and lifetime results, resulting in a permanently lower fertility rate.