Netflix and Chill? Umm, No Thanks

New data from the CDC shows birth and fertility rates in the U.S. continued to decline in 2020 to the lowest level in more than 40 years down to 56 births per 1,000 women of child-bearing age and 1.6 births per woman, well below the 2.1 replacement rate. Twenty five states had more deaths than births.

Early in the pandemic there had been speculation that with couples cooped up at home with no place to go, there would be a baby boom. Well, the opposite happened. Instead of "Netflix and chilling," couples were just...well, Netflix binging. The amount of time U.S. households spent streaming nearly doubled in 2020 over 2019. It's hard to get busy when you're busy watching the Queen's Gambit, the Crown or Bridgerton. Last year Netflix added 37 million new subscribers worldwide — by far the biggest increase since the company expanded its DVD-by-rental service into video streaming 14 years ago. But its wasn't just Netflix, Amazon, Disney+ and a plethora of other streaming services gained captive viewers.

Of course, correlation isn't causation as statisticians frequently warn...so what's really happening? As the NYT notes, "births tend to dip after economic crises, as women put off having babies because of uncertainty with jobs and income. The birthrate dropped sharply in the early 1930s, after a stock market crash precipitated the Great Depression. But it picked up a few years later, once the economy started to bounce back. However, the recent decline, which began after the Great Recession in 2008, has continued, despite improvements in the economy. This unusual pattern has led demographers to wonder whether something else is going on."

Economics still may be an important factor, as couples worry about student debt, housing affordability and rising cost of child rearing, but there is also likely a social impetus with women choosing to form families at later ages to complete studies, build careers and generally gain more "maturity".

There are of course economic consequences to a lower birth rate. Combined with a leveling off of immigration rates (see chart below), falling birth rates could slow long-term growth. After all, GDP growth is driven by two key factors, the size of the labor force and productivity gains (for a given level of capital stock, which is ample in developed countries). Unless there are significant increases in productivity (which hasn't happened in 20 years), a shrinking labor pool will challenge standards of living as retirement and health benefits financed through taxes fall increasingly on lower proportions of the population. As they say, demographics is destiny...