Two weeks ago, this column looked at experiments with babies, revealing just how much humans love to be in control of their lives from a very young age. This observation might help explain, decades later, why some adults vote for the guy who appears to be in control, no matter how flawed his character.
This week, as we are heading towards Easter, formerly the pagan fertility festival represented by little rabbits, let’s stick with the baby theme. This time we are going to explore how much babies control our adult lives, our decisions, our vision of the future, and the economy itself.
Ultimately, could the number of us having babies be one of the most accurate leading indicators of where the economy is likely to go in the future?
This issue has fascinated me for some years, probably since I lived in Russia during the collapse of communism, when the essential fabric of Russian society was torn asunder. Russians stopped having children at the rates they had previously done, and many of my own friends there appeared to simply give up on the future.
In middle-income countries, when people who have control over their fertility feel the economy is not able to offer children a good future, large numbers choose not to have babies.
The collapse in birth rates in Russia and in other former Soviet countries during the 1990s and 2000s was unprecedented.
Admittedly, the Soviet experience was extreme but the question is still valid. Is having a child an indicator of where we think the economy is going? If it is, economists had better get themselves to maternity wards pronto.
Let’s look at whether the birth rate is an economic indicator and the impact of having children on gross domestic product (GDP). Can having babies tell us something about the economy and, more interestingly, does a high birth rate mean that the economy is going to boom in the years ahead?
New research published this week in the United States suggests this theory has merit.
Looking at the past few recessions in the US, economists have found a direct relationship between changes in people deciding to have children and changes in the economic cycle. Parents, sensing that things are looking up a bit, decide to have kids, and a year or so after the kids are born the economy does indeed take off. Therefore, people’s hunches about a coming upswing tend to be right.
Conception rates
In contrast, the numbers also show that people don’t have children if they sense things might be about to go pear-shaped and conception rates fall before the downturn hits.
(It shows not only that fewer births precede a recession, but also that the fall in births is not related to a spike in terminations; people plan and conceiving less.)
This means lots of ordinary people have a sixth sense about the economy. Economists shouldn’t say this too loudly because if the average couple has this sense, where does it leave the boffins with all their models, equations and PhDs?
Is the birth rate a leading indicator in Ireland? We get some interesting results, not totally conclusive but significant nonetheless, particularly on the downside.
If you look at births just before the economy collapsed in late 2008 and 2009, we see that people did in fact sense something. Irish births peaked in the first quarter of 2007 and started to fall rapidly after that. Birth rates fell quicker than GDP for nearly two years before GDP started to collapse.
In 2007, the birth rate and its correlation with the economy was unambiguous in Ireland. People sensed something wasn’t right and many stopped having kids. This continued right up to the end of the recession in 2013. Since then, the birth rate has recovered but not nearly as quickly as GDP. We could be having what might be called a “babyless” recovery.
But looking more closely, if you compare the birth rate with the most commonly used leading indicator, consumer confidence, they move closely in tandem. So having babies and consumer confidence, two indicators that measure how people feel about the future, move in tandem.
Since the recession, the birth rate has recovered strongly but not as strongly as GDP, and yet birth rates have led consumer confidence. And, as consumer confidence tells us about the domestic economy, retail sales, local employment, house building and thus incomes, the birth rate is clearly a valuable indicator of the national economy.
Now why is this important?
Crucial area
Knowing where the economy is likely to go is the single most important area of economics, as it’s the bit of the business that purports to tell us about the future. For example, last week the new head of the Federal Reserve, Jay Powell, got up to speak to Congress and millions of people listened intently to hear where he thought the US economy was headed. This will determine where interest rates go and thus determine asset prices in the short term.
In the financial markets, you get this right, place the right bet and you make a fortune. Get this wrong and you face bankruptcy.
Economists have spent a huge amount of time looking for “leading indicators”, the phenomena that occur within the economy ahead of an upswing or a downturn. In a subject that can tie itself up in needless complexities, sometimes simpler is better.
For example, years ago when I worked on forecasting in the Central Bank on Dame Street, as well as lots of data from the economy, we used to count cranes in the Dublin skyline. The more cranes today, the more growth tomorrow. By doing this we injected a bit of common sense into highfalutin economic models.
If economists visited a maternity ward occasionally and counted the newborns, it might introduce a welcome human dimension to the science of prediction.
Births as indicator of consumer confidence: probably true of developed economies with gender equality and access to contraception. In such cases, babies reflect optimism. What, in your view, are the implications for Germany?
After the recent snows, we’ll have a baby boom in about 9 months.
Is there anyway I can make money from that fairly obvious prediction.
Like the crane insight because it’s simple and visual.
The traffic flow on the M50 is another very good indicator of economic activity.
Maybe the traffic flows on all main National routes even.
(There was very little economic activity in the country in the last few days using those measures.)
Maybe the amount of bread consumed might be another very accurate indicator.
Having babies is more cultural than economic these days. It used to be that people had large families to ensure tribal survival. Many children died and a smaller proportion lived to adulthood. Those that did were the pension fund for the to become elderly parents. Western countries , today, have been shamed into not having children because of the alleged problem of global warming. There are those avidly proposing population reduction to save the world. In pre-famine Ireland there were large population of children. 3-4 generations lived together in small cottages. The future was not very bright as a tenant… Read more »
The worse the economy gets then the more you will need children to look after you in your old age. Monetary accounts are pilfered and robbed so pension funds are derelict and destitute. There will be little payout. “We was robbed”, you will cry. “My children must care for me”. http://investmentresearchdynamics.com/americas-pension-crisis-is-about-to-detonate/ “”The under-funding device is a very subtle and brilliant mechanism of wealth transfer. No one thinks about it that way but that’s what it is. A massive wealth transfer mechanism. I worked for some of these insiders at Bankers Trust. I can tell you first-hand, for a fact, that… Read more »
Who would bring a baby into this world of madness where black is white and right is wrong in Orwellian fashion.
some nut will be stimulated by this to gun down the government. May it not happen but if it does let it start in Australia as they paid for this.
https://needtoknow.news/2018/03/kill-climate-deniers-begins-theatrical-run-australia/
This is the discouraging place that allows the bankers to steal our birthright. Economists bought and paid for have been scammers from the start by not raising the alarm. only the Midas school shows a light on this fraud. This is the loss of hope that elected Trump and now throws Italy into further chaos and propelled Brexit. On the other hand this is the time for all proponents of honest money raise as many children as possible to arm the barricades of truth and wisdom and to drain the swamp and throw the scurvy inmates out. posted on http://www.lemetropolecafe.com… Read more »
https://www.irishtimes.com/business/commercial-property/crane-watch-78-cranes-visible-over-dublin-city-centre-on-march-1st-1.3415404?mode=amp&__twitter_impression=true
However a question.
What is the right number of cranes that should be visible and how do you know?
No baby or cranes in sight here for this economic outlook.
http://plata.com.mx/ehttp://plata.com.mx/enUS/More/346?idioma=2nUS/More/346?idioma=2
A cogent explanation of why the Central bank rescues of the financial system did not lead to general inflation, but did lead to financial asset inflation.
General inflation is on its way as the next stage.
All the while the general population is robbed while blinded to reality.
https://www.jsmineset.com/2018/03/06/in-response-to-a-zerohedge-article/
Doug Casey’s list follows. I discussed this topic here. “In an ideal world there would be some radical changes. The best thing for the US in the (famous) long run is to go “cold turkey.” To abolish the Federal Reserve, fire its thousands of employees with their worthless PhDs. Return to 100% reserve banking with a strict separation of demand and time deposits. Depoliticize money by using gold, not Federal Reserve Notes. And default on the national debt, which is rewarding crony capitalists, and will turn future generations of Americans into serfs. And massively deregulate. And abolish the income tax,… Read more »
https://dollarcollapse.com/inflation/wage-inflation-coming-spiking-interest-rates/ Not a crane in sight in this projection of inflation stoking rising wages. Nor any as the yield on the USD 10 year bond is up 100 basis points inless than a year and mortgage rates go from 3.5 to 4.5% , a 28% increase in interest costs to buy a house actually in 6 months. Despite the reported shortage of available labour there appears to be a huge swath of people have given up on earning a living. What’s with that? “As of January for the economy as a whole, the percentage of American civilians aged 16 years… Read more »
Up to the 1960’s Ireland was going through difficult economic times. Families were large. Nature’s way of ensuring the survival of the human race in bad times.. As the economy improved and people felt a bit more secure, family sizes fell. And, that had nothing to do with contraception, termination or basic family planning Nature was stepping in as it does, always . Even today the largest populations are in famine torn countries or countries which are economically poor. After the 2nd World War there was a baby boom. That was because all the men, and indeed women, were lucky… Read more »
Debt and destruction part 1
https://www.milesfranklin.com/debt-and-delusions-part-one/
Debt and destruction part 2
http://campaign.r20.constantcontact.com/render?m=1101357242253&ca=0f54de50-05bc-4126-ae83-3d68df63dbca
What goes up , must come down. What is down will move up. It is just a matter of timing.
https://goldswitzerland.com/central-bankers-never-get-it-right/
The first thing potential parents think about is a home for their child. In 2007/8 prices were so high that most young couples couldn’t afford a home, then prices began to show the first signs of weakness which put a halt to all buying. Basically what I believe is that prices of homes in particular influence young couples when deciding whether or not to start a family. When people see unsustainable inflation with depressed wages that takes away all hope of being able to provide a better future for their children. The birth indicator could be perceived either as a… Read more »
HERE AN IDEA
-> LETS WEAKEN MARRIAGE BY PROMOTING
-> PROMISCUITY AND HOMOSEXUALITY
-> MAKE IT EXPENSIVE TO RAISE KIDS
-> LETS GET THE IRISH TO MURDER THEIR UNBORN BOYS AND GIRLS
-> THEN PUSH TO INCREASE THE POPULATION BY 1 MILLION
=> THROUGH IMMIGRATION
-> ETHNICALLY CLEANSE THEM AND REMOVE THE IRISH IDENTITY
-> NO COHESION TO EVER VOTE TO LEAVE THE EU
=> TAKE THE COUNTRY WITHOUT A SHOT FIRED
.
.
.
NAH THAT WOULD NEVER WORK
https://www.youtube.com/watch?v=IegYM6hCCTg
social media censorship being exposed.
https://www.projectveritas.com/2018/03/12/cruz-grills-twitter-director/
My children and my children’s children will be introduced to real money and learn to abhor the debt based money that has distorted the housing market around the world.
https://www.einnews.com/pr_news/435728627/wyoming-legislature-passes-bill-to-end-all-taxation-of-gold-silver
Exposing the dark state, the criminal Clinton cartel, the implicated senators and congress reps, high echelon FBI and CIA etc.
https://usawatchdog.com/clinton-charity-fraud-biggest-scandal-in-us-history-kevin-shipp/
Things are going down and IMO with the help of the US military backing Trump. There is no other way out. The forces of evil are too widely distributed within the government and its agencies. The Money lenders, firstly corrupted the banking system and then the rest followed, bought and paid for.
The theory is plausible. At least it isn’t implausible. There are so many things we do without conscious awareness. There are so many extraordinary beliefs we hold and ridiculous stories we swallow without evidence too. David should be careful, though, because this is ‘pseudoscience’, for which there is no tolerance.
This article is fairly well hidden on the website. I predicted that Tony would end up talking to himself and it seems we are nearly there!
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