Do Fertility Rates Predict Recessions?

According to new research out of the US, fertility rates can predict economic downturns.

The National Bureau of Economic Research has published a report this week that asserts that according to data collected from the last three economic downturns in the US, falls in the amount of conceptions preceded economic contractions.

The link between birth rates and economic cycles has been examined previously, however this new research is the first to draw the conclusion that there is a predictive relationship between fertility declines and recessions.

Daniel Hungerman of the University of Notre Dame, who co-authored the report drew attention to the fact the this drop in fertility rates would have correctly predicted the 2007 financial crisis, despite the fact that it has been argued that it was difficult to predict:

“None of the experts saw it coming and in its first few months many business leaders were convinced the economy was doing OK,”

However, the year on year growth rate in conceptions turned negative in the third quarter of 2007, while markets were at all time highs, six months before the downturn.

Similar patterns were detected in the early 90s, early 2000s and late 2000s, with data having been collected on the 109 Million births recorded in the US from 1989 to 2016.

According to the study, conceptions were a more accurate predictor of recessions than consumer confidence, measures of uncertainty and purchases of high cost goods such as cars and washing machines.

Conceptions would not be the first unorthodox economic measure to be proposed, with skirt length, sales of lipstick and sales of men's underwear having been proposed previously.

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