The latest consumer sentiment indicator suggests a gloomier assessment of the economy, even though it stays strong. However, one other indicator may contradict this weak reading.
According to a Bank of America survey, more Americans are planning to have a baby next 12 months, a possible sign that there may be at the least enough optimism concerning the future to bring more life into the world.
In a research note Wednesday, BofA said the share of respondents who said they or their partner predict/intend to have/adopt a baby in the following 12 months rose to 12.4% in June from 11.5% in May. The latest figure is the very best since February 2023 and likewise a big increase from lower than 8% in February of this 12 months.
The increase in June can also be not necessarily seasonal. The BofA survey shows that this month’s reading was higher than that for June 2023 and June 2021, but lower than that for June 2022.
And as expectations for larger households rise, this might also fuel the will for a brand new home.
The proportion of respondents who said they plan to purchase a house in the following twelve months was 24.0% in June, roughly unchanged from the May figure of 24.3%, but represents a big increase from the figures below 20% within the second half of 2023 and the primary half of 2024.
This is despite the undeniable fact that mortgage rates of interest rose sharply initially of the 12 months, when signs of sustained inflation dampened hopes of imminent rate of interest cuts by the US Federal Reserve.
Meanwhile, the University of Michigan’s consumer sentiment indicator fell to its lowest level in seven months, plunging to 65.6 in June from 69.1 in May, defying forecasts for an improvement to 72.
Of course, the expressed desire to have children differs from the actual birth rates, which have been falling for years and reached a record low of 1.62 births per woman within the US last 12 months. More and more members of Generation Z say they only need to have one child, while sperm counts have been declining for a long time – some are talking about a worldwide “sperm apocalypse”.
Other developed countries are experiencing similar trends that might weigh on their growth potential. Low birth rates have so apprehensive governments in East Asia that they’ve introduced further financial stimulus, but to date these have had little effect.
The decline has also alarmed Tesla boss Elon Musk, who has described the rapidly declining birth rate worldwide as “one of the greatest risks to civilization.”
“So many people, including smart ones, think there are too many people in the world and that the population is getting out of control. The opposite is true,” he said in 2021. “Please look at the numbers – if people don’t have more children, civilization will collapse, mark my words.”
