Baby Boom in Stronger States Signals U.S. Birth Recovery

Photographer: Marcio Jose Sanchez/AP Photo
Besides South Dakota, 18 other states, including Idaho, Kansas, North Dakota, Texas and Ohio had 2012 fertility rates higher than recession lows, according to an analysis by Daniel Schneider, a scholar in health policy research at the University of California at Berkeley.

Doctors at Avera McKennan Hospital in Sioux Falls, South Dakota, delivered more than 200 babies in August, a record for a single month, and are on pace for their busiest year ever.

“We’ve got babies coming out of our ears,” said obstetrician Kim McKay. “We’ve seen a baby boom.”

Rising fertility rates in states such as South Dakota, where unemployment is 3.8 percent, are prompting some demographers and economists to predict a reversal of the nationwide decline in fertility that coincided with the recession and its aftermath. More births would boost the economy by spurring demand for new homes and goods from pregnancy tests and diapers to furniture and cars.

“The higher birth rates in stronger-state economies are a good leading indicator for the rest of the country,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “There could even be a spurt of births sometime around mid-decade given that many young households have been putting off marriage and having children.”

Besides South Dakota, 18 other states, including Idaho, Kansas, North Dakota, Texas and Ohio had 2012 fertility rates higher than recession lows, according to an analysis by Daniel Schneider, a scholar in health policy research at the University of California at Berkeley.

The jobless rate in those 19 states averaged 6.1 percent in August compared with a national level more than a percentage point higher.

‘More Comfortable’

“As the economy in certain areas gets better, and robustly so, people feel more comfortable having that first child, or that second child, and that will pick up,” said Chris Christopher, director of U.S. and global consumer economics research at IHS Global Insight in Lexington, Massachusetts. “Population is one of the most important drivers for consumer spending.”

The U.S. fertility rate dropped to 63.2 births per 1,000 women of childbearing age in 2011 from 69.5 in 2007, the year the recession began, as financially strapped Americans delayed marriage and childbirth, according to a report from the U.S. Department of Health and Human Services. In 2012, it fell slightly, to 63 births per 1,000 women, preliminary data from HHS show.

Economists say there’s a link between fertility and economic well-being. North Dakota, where an oil boom has helped deliver the nation’s lowest unemployment rate, is a case in point: its fertility rate rose 4.1 percentage points between 2010 and 2012, the largest recovery in the nation, according to Schneider.

Boom, Bust

States that fared better during the recession, including North Dakota, had no or little fertility declines, while hardest-hit states, such as Arizona, Nevada, California, Florida and Georgia, posted some of the biggest drops.

“I expect that the U.S. fertility rate will go up again,” Ronald Lee, professor of demography and economics at University of California at Berkeley, said in an interview. “The increase we see in North Dakota suggests that the decline in the fertility rate that we have seen nationwide during the recession was just a blip, a temporary wiggle due to the recession.”

Nationwide, the jobless rate rose to 7.3 percent in October from an almost five-year low of 7.2 percent the month before, a Labor Department report showed last week. It has fallen from a peak of 10 percent in October 2009, following the 18-month recession that ended in June of that year.

Delaying Plans

Women who delayed having children during the recession tended to be younger, so they have more years of fertility left to have children, Schneider said.

Alicia Fischer, 28, a nurse who is pregnant with her third child, said the fact that both she and her husband, a physical therapist, have full-time jobs in Sioux Falls gives her confidence they will be able to provide for their family. They’ve been working steadily since leaving college, while asking relatives for help raising a 4-year-old daughter and 2-year-old son.

Kelley Webert, 31, is expecting her third child in April. She said she feels better about having a larger family now than in 2009, when her husband was laid off from Cessna Aircraft Co. for four months. He’s now working full time as a machinist at another company and she is a nurse and perinatal analyst at Wesley Medical Center in Wichita, Kansas.

“We will be able to handle it,” she said of their growing family, which includes children ages 11 and 7. “My financial stability has gotten better over the years.”

Stronger Spending

More infants mean more spending by families who need bigger houses, more appliances, furniture, strollers and diapers. Consumer spending represents about 70 percent of the world’s largest economy.

The value of the pregnancy tests market has grown since 2011, following a decline from 2008 to 2010, said Matthew Farrell, a spokesman for Church & Dwight Co., the Ewing, New Jersey-based manufacturer of First Response, the most popular pregnancy test in the U.S.

Hain Celestial Group Inc., a Lake Success, New York, producer of organic foods, will benefit from higher fertility rates, according to chief marketing officer Maureen Putman, who said sales of the company’s baby products have been growing steadily even in years when births were low.

A larger family often means a bigger house, and Walter Molony, a spokesman for the National Association of Realtors in Washington, said there’s been a pick-up in “trade-up” buyers this year, driven by families with children.

Bigger Homes

“We’ve seen more transactions of homes in higher price ranges than we did a year ago,” Molony said. “There’s probably more activity by families with children buying larger homes.”

Birth rates have been lower and for longer than Kimberly-Clark Corp. said it had expected, the Dallas-based maker of Huggies diapers said in July. For 2013, it anticipates them to “level out” in North America, Chief Financial Officer Mark A. Buthman told investors during a Sept. 4 presentation. “We’re not at an inflexion point yet, but we are starting to see the shallow end of the bowl.”

American fertility has recovered after previous crises. During the Great Depression the number of children per family fell to 2.3 on average in 1933 from 3.5 in 1900, according to the U.S. Centers for Disease Control and Prevention. It rebounded to as high as 3.7 in the 1950s, then declined again with the advent of modern contraceptives, stabilizing at about two children in 1972, government data show.

Financial Decisions

A state-level study by the Pew Research Center in 2010 and 2011 highlighted that a deteriorating economy makes people less willing to have children, said Gretchen Livingston, a Pew researcher in Washington.

Americans started having fewer babies within one to two years after economic conditions such as per capita income and employment started to worsen, Livingston said. In Arizona, the fertility rate declined by 12 percent between 2007 and 2009. In Nevada, it dropped by 10 percent.

“Children are expensive,” said Elisabeth McKetta, 34, a freelance writer and editor in Boise, Idaho, who has one child and is expecting her second in May. Her husband works as a real estate agent. “We’re hoping that we will keep earning more money as we get better at our jobs and do them longer.”

A family making between $60,640 and $105,000 would have spent about $12,710 during the first year of having a child in 2012, according to an August report from the U.S. Department of Agriculture.

Birth coach Kyndal May sees spending picking up even during pregnancies. She doubled the number of childbirth classes she runs at Boise, Idaho-based Baby Bump Services this year. She charges $175 per couple.

“The fact that they are willing to spend money on an out-of-hospital childbirth class is a really good indicator” that people more comfortable having bigger families and spending more on babies, she said. “People are willing to pay.”

To contact the reporter on this story: Kasia Klimasinska in Washington at kklimasinska@bloomberg.net

To contact the editor responsible for this story: Chris Wellisz at cwellisz@bloomberg.net

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