Where are the Babies?
New data for 2020 suggests that there has been a sharp decline in the global birthrate. Apparently, the combined effects of the pandemic, lockdowns and the global recession that followed, have contributed to a reduction in the world wide fertility rate. We previously discussed the expected long-term decline in the U.S. birth rate in our blog, We Have a Population Problem.
A global reduction in fertility will have material consequences for a wide range of businesses and economies, from reduced demand for baby food and diapers, to lower enrollments for educational institutions.
Less people will mean a smaller workforce, which could lead to reduced demand for goods and services. However, despite reductions in the number of workers, productivity gains and higher wages could combine to sustain demand through per capita increases in spending.
Investors should consider that a lower birth rate could make it difficult to sustain current revenue and earnings growth rates and expectations.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®