What do the U.S. birth rate and immigration have to do with inflation and interest rate hikes? WWL’s Newell Normand discussed it this week with Guy Williams, president of Gulf Coast Bank and Trust.
“One of the challenges we face is we’re… we’re aging as a country. And if you subtract immigration, just native-born Americans, we don’t have enough children to support any sort of population growth, Williams said. “So, there is room... for a good, well-managed legal immigration policy without destroying wages.”
According to the U.S. Centers for Disease Control and Prevention, the birthrate in the U.S. is 11 per 1,000 and the mean age at first birth is 27. National Health Statistics Reports data released in January showed a decline in fertility rates in recent years and increasing maternal age.
“Simply put, most women are just waiting until they feel they are ready,” said a CBS News report on the data. “Reasons for the delay are varied, the report found, and include the pursuit of higher education, increased labor force participation, changes in familial values, relationship instability and financial considerations.”
Per the data, “early childbearing, particularly in the teen years, is associated with negative social, economic, and health consequences for the young woman and her child,” and experts cited by CBS said current trends may not be a bad thing.
“Well, one of the reasons that the birth numbers are down is people can’t afford to have kids, right?” Normand asked Williams.
“It’s true,” he said. “But it’s also true that every developed country, it seems, without fail, as countries get richer, the birth rate declines. And it doesn’t matter if you’re going from subsistence level to lower middle class or to, you know, just barely out of poverty… as soon as your income goes up, the number of children goes down.”
In October of last year, the National Bureau of Economic Research released a paper that indicated working from home allowed birth rates to swell during the pandemic, leading to a “baby bump.” However, the bureau also said that immigration is an important factor in population growth.
“Our estimates highlight the very important role of foreign-born women in bolstering U.S. fertility rates,” said the paper. “Without these births, the U.S. birth rate would be much lower and closer to other low-fertility countries found in Europe or Japan.”
So, what does this mean for the U.S. economy?
Williams explained that The Federal Reserve Bank bases its interest rate hikes – which are intended to bring down high inflation and make it more expensive for Americans to borrow money – partially on unemployment. As of this week, after months of rate hikes, unemployment is still relatively low and inflation is expected to remain above the 2% Fed target.
Reuters reported this week that central bankers predict that interest rates will remain high or get higher.
“We have not found a way to integrate the immigrants to America into the legal workforce,” said Williams. “So, this pressure on, you know, high demand, low supply of workers is not helping.”
He also said that “if the immigrants that come in are in the legal workforce, it could be they’ll actually help the economy grow,” adding that “that’s been our history.”
Normand and Williams also talk about a solar fraud scam, the IRS offering a free tax eFile system and the debt ceiling. Listen to their full conversation here.
Related
