The National Center for Health Statistics released birth data for 2008, and to the surprise of some, births acutally fell compared to 2007 -- by 68,000.    The New York Times  writes, "In 2007, the number of births in the United States broke a 50-year-old record high, set during the baby boom.  But last year, births began to decline nationwide, by nearly 2 percent, according to provisional figures released last week."

Interestingly, the birth rate shrank the most in the states hardest hit by the recession -- California, Florida, and Arizona -- giving credence to the belief that the decline was due to the bad economy.  After all, what would-be parent would want to have a baby knowing that they might lose their job...or home!

We agree with this analysis, though we would add one important caveat: don't forget demographics! At the margin, some number of families will choose to postpone pregnancy until they feel more economically secure, and some number of women will opt for abortion out of perceived financial necessity.  But whatever this percentage might be, it will be a portion of a much larger pool of would-be mothers.  The recent decade-long surge in births (see chart below) has been driven by the first wave of the Echo Boomers -- the children of the original Baby Boomers.   And the Echo Boomers have only just begun the process of family formation.  In fact, the largest cohort of generation is still in college!

This means that the current baby boom is likely to last for at least another decade, when the current class of college freshmen will be in their prime family formation years.  So, we might have a down year or two in 2008 and 2009, but the Great Recession -- no matter how bad it might be -- is not likely to completely derail the surge in pregnancies.  Ultimately, this is very good news for the housing market, as many young families will be eager to purchase the suburban and exurban homes that we seem to have in such oversupply today.  It's also good for consumer spending. So, while the present still looks rather bleak, there is quite a bit of hope for the future.

Charles Sizemore, CFA

Co-author of the recently-published Boom or Bust: Understanding and Profiting from a Changing Consumer Economy

Posted in : The Echo Boomers 

Comments

DBPoole, Thanks for your comments. Being 40, you'd be considered a Gen Xer. Gen X is the smaller generation wedged in between the larger "bookend" Baby Boomers and Echo Boomers. It's somewhat subjective as to where you draw the exact line, but the general definition of an Echo Boomer is someone born from the early 1980s to the mid to late 1990s. Thanks! Charles
Posted by csizemore@hsdent.com | August 07,2009 06:45 PM

Charles, as always the material you offer here is fascinating and top-rate. I wonder if you could speak a little bit to the definition of "Echo Boomer." As a child of a boomer myself I haven't been in college for some years now (just turned 40). Is another name for "Echo Boomer" Generation X, or are EBs some overlapping group or subset?
Posted by jthaley@gmail.com | August 07,2009 04:11 PM

Charles, though 2007 per the New York Times was the highest birth year, the graph doesn't reflect that. Does immigration explain the difference?
Posted by garybang@mac.com | August 08,2009 10:05 AM

Gary, you are exactly right. Years (or even decades) from now, we will have to adjust the recent years' numbers to reflect new immigrants by birth year. Since few immigrants come here at the age of 1, we would not see the jump until much later. For example, if a 30-year old immigrant comes to the US in 2037, he would show up as a birth in 2007. So because of this adjustment, our chart will always look a little different and will change over time to reflect the birth years of new immigrants.
Posted by csizemore@hsdent.com | August 08,2009 11:03 AM

Now all you need to do is add this data to a new stock market forecast. I would suggest that future forecasts be based on historically NORMAL P/E ratios rather then sliding the scale around based on the markets current mood. Most people know that "Mr. Market" has wild mood swings (And this can be easily pointed out to the uninformed with simple foot notes at the bottom of the chart.) and a stable chart would help rational people know which mood he is in so that we can better take advantage of him. ;)
Posted by bankfraud@gmail.com | August 08,2009 09:35 PM

Actually if you read The Fourth Turning by Neil Howe(Material referenced by Harry Dent in his books you read that Boomers are those born between 1943 and 1960, Gen X'rs are born between 1961 and 1981 and Millenials or Gen Y's are born between 1982 and approximatley 2004.
Posted by jdraper14@comcast.net | August 09,2009 11:26 PM

Jefferydraper, While we do indeed like Strauss a Howe (and have quoted them extensively in the past), the exact definition of the generations is still somewhat subjective. In recent years, some commentators have carved out a new generation dubbed "Gen Z" that comes after the Echo Boomers, starting around the turn of the Millennium. There is no "official" cutoff, but most demographers are roughly in agreement, give or take a couple years here and there. CLS
Posted by csizemore@hsdent.com | August 10,2009 07:42 AM

A Question - when you say that your figures include adjustments for immigration, does that include both legal and illegal immigration? Thanks
Posted by tonybracks@gmail.com | July 09,2010 11:12 PM

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