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Fewer Babies and Higher Price-Earnings Ratios Go Hand in Hand

As U.S. population growth slows to a crawl, JPMorgan Chase economist finds a surprising link. 

It’s no paradox that stock prices are exceptionally high at a time when the U.S. is experiencing near-record-low population growth. Fewer babies and higher price-earnings ratios go hand in hand, JPMorgan Chase & Co. economist Jesse Edgerton wrote in a client note on May 5.

To be clear, this doesn’t mean slow population growth is a good thing—far from it. As the headline on a May 5 column by Bloomberg Opinion columnist Noah Smith says, “There are good and bad reasons” for slow population growth, “but they all add up to a grim economic future, especially for younger people.”