The latest reading of consumer sentiment suggests more gloom about the economy even as it remains strong, but another indicator could undermine the weak reading.
More Americans are planning to have a baby next year, according to a Bank of America survey, a possible sign that there is at least enough optimism about the future to bring a new life into the world.
BofA said in a research note on Wednesday that the proportion of respondents who said they or their partners were expecting/trying to have/adopt a child within the next 12 months rose to 12.4% in June from 11.5% in May. The latest reading is the highest since February 2023 and has also risen sharply from less than 8% in February this year.
The June jump is also not necessarily seasonal. The BofA survey shows this month’s reading was higher than June 2023 and June 2021, but lower than June 2022.
And as expectations for larger households rise, it may also contribute to increased desire to find a new home.
The share of respondents who said they planned to buy a home in the next 12 months was 24.0% in June, up roughly from 24.3% in May, but seeing significant increases in the second half of 2023 and the first half of 2024 compared with an indicator below 20%. .
That’s even after mortgage rates rose sharply earlier this year, when signs of persistent inflation dampened hopes that the Federal Reserve would cut rates soon.
Meanwhile, the University of Michigan consumer sentiment index fell to its lowest level in seven months, falling to 65.6 in June from 69.1 in May, missing forecasts for an improvement to 72.
Of course, reported intentions to have a child differ from actual birth rates, which have been declining for years and last year reached a record low in the United States of 1.62 births per woman. It comes as more Gen Zers report planning to have just one child, while sperm counts have been declining for decades in what some are calling a global “spermpocalypse.”
Other developed countries are experiencing similar trends that could impact their growth potential. Low birth rates have so alarmed East Asian governments that they have introduced additional fiscal stimulus, which has so far had little effect.
The decline also alarmed Tesla CEO Elon Musk, who famously called the world’s rapidly falling birth rate “one of the biggest risks to civilization.”
“So many people, including smart people, think there are too many people in the world and think the population is getting out of control. It’s quite the opposite,” he said in 2021. “Please look at the numbers: if people don’t have more children, civilization will collapse, mark my words.”