Births and Birth Rate on the Decline in the U.S.

By Kim Kennedy Director of Forecasting, Dodge Data & Analytics

While last year was unique for so many reasons, one way it was not unique is that the number of babies born in the U.S. fell 4% in 2020 to 3,605,201. The birth rate also fell 4% to its lowest level since 1979 (42 years).  Just 55.8 babies were born for every 1,000 women aged 15-44 in the U.S. The negative economic impact of the pandemic has caused many Americans to be concerned about their jobs and income, student loan debt, and many other aspects of their finances, leading them to postpone or forego decisions to have children.

Furthermore, the number of births and birth rate are unlikely to pull a sudden reversal in 2021 as the economy begins to re-open. Since gestation is nine months, decisions about having children made in 2020 will continue to impact births through most of 2021. Even as the economy begins to improve, births and birth rates are unlikely to show major changes. A declining birth rate, in fact, has become a long-standing fact for the United States. In the 1950s, for example, the typical woman had an average of four children. Today, that figure is less than two (1.6 in 2020) — a level that is below the “replacement rate” and therefore portends a decline in the population.

Why is this significant to the construction industry? Population growth is the underlying driver of nearly all construction — with the possible exception of renovation that simply improves existing facilities and does not add new space. An argument could be made that a declining population even lowers demand for renovation, however, as a smaller population requires less space. Therefore, a decline in the U.S. population will mean weaker demand for construction in coming years, shrinking the pie available to members of the construction industry.

The wild card, of course, lies with immigration. The U.S. population is a combination of the internal, domestic population as well as the in-migration of people from other parts of the world. As U.S. immigration policies are loosened under a presumably more expansive Biden administration, immigrants may be able to take up some of the slack that a declining domestic population creates. How much of that slack will be tightened remains to be seen, however, since the U.S. has struggled to find consensus on immigration policy for some time.