Births at 11-Year Low May Prolong Five-Year Housing Slump
By Steve Matthews
(Updates with October existing home sales data in 11th paragraph.)
Nov. 21 (Bloomberg) — Frances Janisch had a daughter five years ago. Now she and her husband may not have a second child because income from their photography business in New York City is erratic.
“I always imagined I would have two, so it bothers me that I don’t,” said Janisch, 41, who grew up with a large extended family in South Africa. “It has everything to do with economics.”
Similar decisions to postpone or forgo having babies may delay the recovery from the five-year U.S. housing slump and restrain future consumer spending on goods and services from child care to diapers, soaps and toothpaste. Expenditures associated with one child for a middle-income family are $226,920 over 17 years, with housing the biggest expense, the U.S. Department of Agriculture estimated in June.
The number of births fell to an estimated 4 million last year, the fewest since 1999, according to National Center for Health Statistics data. American families — whose finances have been hurt by high unemployment, falling home prices and low pay raises — lack confidence to plan for “explosions in spending” required by a new child, says Peter Francese, a demographic- trends analyst in Exeter, New Hampshire, for the MetLife Mature Market Institute. U.S. births may not recover until 2013, he predicts.
Families in the child-bearing years “have been hit hard” by the recession, said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who estimates population for his economic forecasts. “Slower population growth will exacerbate the slowing in economic growth.”
A return to more babies can’t come too soon for household- product makers.
‘The low birthrate continues to be lower than was forecast early in the year, and so you’re just not having as many new moms,’ Thomas Falk, chief executive officer of Kimberly-Clark Corp., maker of Huggies diapers, said on a conference call with investors Oct. 24. ‘With the weaker economy in the near term, I’d say the category is probably going to be a little softer in 2012 than our prior long-range forecast would have indicated.’
Newell Rubbermaid Inc., which makes strollers and car seats, faces ‘sustained challenges’ in its baby business, Chief Executive Officer Michael B. Polk said in a conference call with investors Oct. 28. Birthrates ‘just haven’t recovered,’ so ‘we’re going to be living with slow-to-no growth markets next year.’
My reproductive rights radar is going off. The logic somehow doesn’t make sense to me.