The US fertility rate has reached a new low of 1.6, according to recent reports. This decline in fertility rate, combined with a decrease in net immigration, has resulted in a historic low population growth rate. The implications of this trend are far-reaching, with significant effects on the country’s economy.

Economic Implications

A smaller labor force means a smaller economy. Economic growth is driven by an increase in the labor force or higher output per worker. With the labor force growth slowing down, the economy is likely to experience slower growth. The Congressional Budget Office projects that deaths will start to exceed births in 2030, and without positive net migration, the total population would start to shrink.

The slowdown in population growth also has macroeconomic consequences, including lower interest rates. A smaller workforce will need fewer factories, vehicles, and real estate, leading to downward pressure on interest rates. Additionally, an aging population will lead to increased savings, reducing the cost of borrowing.

Policymakers’ Response

Policymakers can respond to the population growth slowdown in several ways. They can try to increase fertility rates, although efforts in this area have had mixed results. The US could also admit more illegal immigrants to boost the labor force. Furthermore, policymakers can focus on increasing output per worker by investing in science, reducing trade barriers, and ensuring access to cheap and reliable energy.

Original reporting: KTVZ (Central Oregon) — read the source article.