The HS Dent Financial Blog

RSS      

Boom in Births, Bust in Migration

As a very positive sign for the future, the New York Times reports that “More babies were born in the United States in 2007 than in any other year in American history.” (“’07 U.S. Births Break Baby Boom Record”)

The National Center for Health Statistics recorded 4,317,000 births in 2007, slightly higher that the previous high figure for 1957—at the absolute peak of the baby boom.   Interestingly, the Times continues, “…in contrast with the culturally transforming postwar boom, when a smaller population of women bore an average of three or four children, the recent increase mainly reflects a larger population of women of childbearing age.” 

So, in terms of raw numbers, the new generation may prove to be even bigger than the Baby Boomers.  But given that they are a proportionately smaller piece of the overall population, it is doubtful that they will have the same “bull in a china shop” effect on the U.S. economy.  Still, it does give us hope for the future.  A large cohort of consumer and tax payers will certainly be welcome. 

Meanwhile, we see that the other significant driver of population growth—immigration—continues to slide.  A deep recession that has hit the sectors most often manned by immigrants particularly hard—such as homebuilding—has cause immigration rates to significantly decline.  Furthermore, many existing immigrants have decided to return to the country of their birth, seeing little in the way of opportunity in this economic environment. 

Domestic migration of Americans between states has also slowed markedly.   Consider this quote from today’s Wall Street Journal (“U.S Migration Falls Sharply”)

Migration around the U.S. slowed to a crawl last year, especially for this decade’s boom towns, as a weak housing market and job insecurity forced many Americans to stay put.Demographers say the dropoff in migration, shown in Census data to be released Thursday, is among the sharpest since the Great Depression…

Not surprisingly, we see that,

The Census data show that the biggest falloffs were in the worst housing markets… .  The migration slowdown, if it persists, could further delay the economic recovery in depressed housing markets such as Phoenix and Las Vegas. These places generally have a larger amount of unsold homes, and a disproportionate share of the economy is dependent on construction and other real estate-related trades. Economists say the housing-centric economies will need to reduce their stock of unsold homes before any meaningful economic recovery takes place. That’s hard to do when fewer people are moving there.

Eventually, the trends that drove migrants to areas like Phoenix, Las Vegas and Sarasota will reassert themselves.  With housing prices falling, the cost of living is returning to its former, more attractive level as well.  Furthermore, the bust has not affected the sunny, warm weather or the attractiveness of the local golf courses.

Busts create opportunities.  And there is no question that some new migrants will get excellent deals on their formerly unaffordable dream homes in the Sun Belt.