- America's falling population isn't necessarily bad for the economy, Fisher Investments said.
- The US birth rate just fell to its lowest level in over 40 years, according to provisional CDC data.
- But consequences could be offset by technological advancements and time, the investment firm said.
Americans aren't having nearly as many kids as they used to, but that won't be the blow to the US economy that many have feared, according to Fisher Investments.
In a recent note, the investment advisory firm pointed to falling birthrates around the world, with the US rate falling to a multidecade-low last year. The nation saw the fewest number of babies born since 1979, according to provisional data from the Centers for Disease Control.
That continues a long-running decline in the US birth rate, with the number falling ever since the 1960s, according to World Bank data.
But fewer babies being born isn't necessarily a bad thing for the economy, the firm said. The birth rate has fallen before without crimping growth, such as during the '80s and '90s, when the economy boomed despite falling fertility the prior decade.
A falling birthrate is also more typical among wealthier nations. That's because the nation has a lower infant mortality rate and people are generally living longer, allowing them to have fewer babies and potentially postpone having kids.
"Yes, falling birth rates could have negative long-run ramifications if a true reduction in human capital and other factors don't offset this. But that isn't a given since a lot can change in the near and distant future," the firm added.
Economists have said technological advances, like AI, could blunt the impact of a smaller workforce. AI could disrupt as many as 300 million jobs around the world, Goldman Sachs estimated. That could mean the economy will be just fine, even with a smaller number of people entering the workforce.
Even if falling birthrates do weigh on the economy, it won't affect the market right away. The burden of a falling population takes years to reveal its full effect, meaning the market and the economy aren't in any near-term peril, Fisher added.
"Concerns about fewer babies are rooted in the notion population growth is tied to economic growth (i.e., any slowdown or decline in the former will hurt the latter,) the firm said. "To us, this says more about where sentiment is today: when well-known false fears grab eyeballs, skepticism remains pretty prevalent, suggesting the wall of worry bull markets climb remains high."
Ken Fisher, the firm's founder and co-chief investment officer, has been bullish on stocks for months, brushing off the market's fears over a potential recession and higher-for-longer interest rates. Stocks are likely still in a bull market, he said, as bear markets typically begin with a gradual decline in equities, not a sudden drop, which stocks saw over the past month.