Analysis: Declining US Birth Rate Not the Economic Disaster Some Fear, Says Fisher Investments

Recent analysis from Fisher Investments suggests that the declining birth rate in the United States, though significant, may not spell the economic catastrophe that some anticipate. The advisory firm highlights a global trend of falling birth rates, with the US experiencing its lowest rate in decades, according to data from the Centers for Disease Control.

This downward trend in birth rates is not a new phenomenon. World Bank data indicates a consistent decline since the 1960s. Despite these numbers, Fisher Investments argues that a shrinking population may not be detrimental to the economy, citing previous instances in the 1980s and 1990s when economic growth persisted despite declining fertility rates.

The correlation between falling birth rates and economic prosperity is not straightforward. Wealthier nations tend to have lower birth rates due to factors such as improved healthcare leading to lower infant mortality rates and longer life expectancies, allowing individuals to delay or choose not to have children.

While acknowledging potential long-term implications of declining birth rates on human capital and other factors, Fisher Investments remains cautiously optimistic about the future. They emphasize the unpredictability of future developments and the potential for technological advancements, such as AI, to mitigate the effects of a smaller workforce.

Economists have also speculated on the impact of technological innovations like AI on the labor force. Goldman Sachs estimates that AI could disrupt millions of jobs worldwide, potentially offsetting the effects of a declining workforce.

Moreover, Fisher Investments suggests that any economic repercussions from declining birth rates would likely unfold gradually over time rather than having an immediate impact. Founder and co-chief investment officer Ken Fisher remains bullish on the stock market, downplaying concerns about a recession or prolonged periods of high-interest rates. He asserts that the recent fluctuations in the market do not signify the beginning of a bear market, as bear markets typically manifest through a gradual decline rather than sudden drops like those observed recently.