Economic headwind: Fewer babies being born in the U.S.

WASHINGTON — Women in the United States gave birth last year at the lowest rate in 30 years, and that trend could weigh on economic growth in the coming decades.

According to the Centers for Disease Control and Prevention’s National Center for Health Statistics, the number of U.S. babies born last year fell 2 percent from 2016 to 3.85 million, also a 30-year low. Births have fallen for three straight years. The fertility rate dropped 3 percent last year to 60.2 births per 1,000 women ages 15 through 44.

An aging society has already weighed on economic growth in the United States in the past decade, with the vast baby-boom generation retiring and fewer young people replacing them. Data suggest the trend is likely to continue.

Kathy Bostjancic, an economist at consulting firm Oxford Economics, said that roughly 10 years ago, the number of Americans working or looking for work was growing about 1 percent annually. With birthrates declining, that figure has fallen to about 0.3 percent. That essentially acts as a 0.7-percentage-point drag on long-term U.S. growth.

“Demographics have a really powerful impact on the economy,” Bostjancic said.

The Federal Reserve in March upgraded its short-term economic growth forecast to about 2.7 percent for this year and 2.4 percent for 2019, partly because of the Trump administration’s tax cuts. But the Fed kept its longer-run annual growth forecast at just 1.8 percent, reflecting the demographic headwinds.

Aside from fewer workers, an aging society can hold back growth because fewer people are buying homes, cars and other costly items. Savings generally will rise as people age and prepare for retirement. And as elderly people live longer, they also slow their spending while in retirement, Bostjancic noted.

Most economists attribute the low interest rates and low inflation of the past decade, in the United States, Europe and Japan, at least in part to aging.

Economic research earlier this year found that U.S. fertility fell sharply roughly nine months before the past three recessions. That suggests that such declines could signal economic downturns.