Humanity has entered a new era of rapid population decline. Globally, the total fertility rate is likely already below replacement—that is, below the level needed to sustain the population in the long run, approximately 2.18 children per woman. In the US, it’s around 1.6 – without immigration, our population would have already begun to decline. If we are unable to address our fertility crisis, the US will face an existential economic crisis driven by a steep decline in fertility rates—one that could have an impact measured in the quadrillions of dollars.
Few countries remain above replacement—except for those in sub-Saharan Africa and Central Asia. Furthermore, fertility rates are declining more significantly and, importantly, at a faster pace than anyone anticipated a few years ago. This trend is evident in both wealthy and poor nations, in religious and secular states, in countries with right-wing governments, as well as those with left-wing governments, and in nations with free abortion access and those with restrictive abortion laws.
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The implications of declining fertility in the US are the most crucial economic issue of our time. …
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Japan’s weak economic performance over the past 25 years is not a mystery; it is merely the result of a declining population. Demographics shape destiny, even in terms of economic growth. In other words, Japan’s current economic situation (good performance of growth per working-age adult but poor total output growth) foreshadows the future of the US economy.
The consequences of significantly slower output growth will be severe for the US economy. While we consider output growth per capita when assessing welfare (and output per capita growth will not decline as sharply as total output growth), total output growth is crucial for addressing the funding of Social Security, Medicare, Medicaid, servicing our public debt, and financing our armed forces in the face of increasing international competition. Once we begin to contemplate the fiscal implications of a declining population, it becomes difficult to focus on anything else.
