One of the great strengths of the U.S. economy, especially compared to Europe and Japan, is a relatively high birth rate, which keep the population young, on average, and population growth robust. “Everybody comes into world with one mouth and two hands,” says economist Donald Boudreaux of George Mason University. “It’s generally true that most people produce more than they consume.”
A growing population is good for the economy when rising productivity continually reduces the amount of resources required to produce a given amount of output. Even now, with the U.S. economy in a rut and too many people out of work, productivity is rising, which means a larger population would generate more wealth per person than a smaller one. Boudreaux points out that Manhattan, one of the mostly densely populated places in America, is also one of the wealthiest, whereas rural states like Mississippi are sparsely populated, and much poorer.
The sizeable drop in the U.S. birth rate, reported recently by the Pew Research Center, has probably occurred because of the struggling economy. Though Pew didn’t investigate the reasons behind the decline, birth rates tend to rise and fall based on how optimistic or pessimistic people feel. The U.S. birth rate peaked in 1957 (hence the “baby boom” generation), when the economy was booming and the unemployment rate was about 4.5 percent. It sagged in the 1970s, when inflation and other problems battered U.S. workers. The birth rate stabilized in the 1980s and stayed more or less level, until starting to dip again in 2008.