We’re in the middle of a Baby Bust. Births have been trending sharply lower since 2007. The number of babies born in America is now at its lowest level since 1979.
According to the research platform Microtrends, the current birth rate for the U.S. is 1.787 live births per woman. That’s less than the 2.1 births per woman a nation needs to simply replace itself from one generation to the next (excluding immigration).
In 1979, the birth rate was 1.81 live births per woman. That doesn’t seem very much bigger than today until you put it in perspective: Our population today – at 333.3 million – is 48% bigger than it was – at 225.1 million – in 1979.
That means the number of babies born now is far lower than 1979 levels. In short, our birth rate has plummeted, as is clearly visible in the chart below.
So why is this happening?
And what effect is it having?
Let’s address one question at a time.
Why Are Americans Today Having so Few Children?
The simple answer is that they’re broke and can’t afford them.
Most would-be parents are not financially prepared enough to start families when they kick off their professional lives buried in tens or even hundreds of thousands of dollars in student-loan debt.
Even if they were ready for that white picket fence in the suburbs, they’d have a hard time finding an affordable house. According to Redfin, home affordability is the worst it’s been in nearly 40 years… and that assumes two working parents. Having a new mom take time off to be with her baby is pure fantasy for most young couples.
To add insult to injury, white-collar hiring across much of the U.S. – in industries such as finance, technology, media, law, and accounting – has stalled. So starting your career and growing in it is as hard as it’s ever been.
This is borne out by an increasing number of reports in mainstream media decrying the shortage of college-level jobs available for new graduates. And white-collar jobs in the entertainment and technology sectors are increasingly hard to come by as some of the biggest employers – such as Apple (NASDAQ:AAPL), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Tesla (NASDAQ:TSLA), International Business Machines (NYSE:IBM), and UnitedHealth Group (NYSE:UNH) subsidiary Optum – continue layoffs.
This is increasingly leading to a troubling trend of underemployment amongst college graduates. According to New York Times’ columnist Peter Coy, 52% of college grads are underemployed a year after graduation, working in jobs that don’t require the degrees they earned. A decade after graduation, 45% of graduates are underemployed.
Never mind that these young adults are trying to start a career and family saddled with student loan debt. The average federal student loan debt in 2023 was $37,088. The total average (including private loan debt) is $39,981.
All of this is to say that young adults are increasingly delaying starting a family and having children because they simply cannot afford to do so. They can barely afford to move out of their parents’ house, let alone feed and raise little humans that not only cost a fortune to feed and educate, but also require daycare – itself an exorbitant expense – for both parents to work.
Pointing the Finger
We can thank the Federal Reserve and governmental financial incompetence for this mess.
When the Fed injected $5 trillion into the monetary system during the pandemic, it inflated the prices of virtually all assets, including homes. The resulting inflation forced the central bank to then aggressively raise interest rates, which made affordability even worse.
And a deficit rising by $1 trillion every 100 days is exacerbating the inflation problem.
I don’t see any of this getting better any time soon.
The forces pushing Americans into having smaller families or not having families at all don’t turn on a dime. If anything, they’ll likely get worse before they get better.
All we can do is protect ourselves from the potential fallout.
This requires smart – and agile – investing.
Have inflation hedges in your investment portfolio.
Invest in companies with good track records in essential industries. And add short-term investing – even trading – to your wealth-creation arsenal.
Here are three stocks to buy now to achieve all three goals… and ultimately protect you against the ravages a declining population (a topic for another day) will have on the U.S. economy.
Protection Stock No. 1: National Retail Properties (NNN)
Tens of millions of Americans depend on Social Security to meet their basic income needs in retirement. But a pay-as-you-go system like this isn’t fundamentally different from a Ponzi scheme. It works so long as there are a lot of young workers paying into the system and relatively few retirees drawing benefits.
That’s not the situation today… and the lower the birth rate goes or the longer it stays depressed, the worse the math gets.
No politician wants to touch this – they call Social Security the “third rail of American politics” for a reason – but math is math.
If you still have a few years until you draw Social Security, you should just assume that substantially all of it will be taxed and that your benefits will likely shrink, at least relative to inflation.
This means you need income. One nice source of reliable and growing income is in high-traffic, mission-critical real estate.
Take a look at National Retail Properties (NYSE:NNN). This real estate investment trust (REIT) owns a diverse portfolio of convenience stores, car washes, and other properties that tend to be both recession proof and future proof.
The stock sports a dividend yield of 5.4%, in line with T-bills.
But unlike bond interest – which is fixed – NNN’s dividend has historically risen over time. It’s raised its dividend for 34 consecutive years and counting.
A stock like this can help to supplement shortfalls in your Social Security check.
Protection Stock No. 2: SPDR Gold MiniShares (GLDM)
Demographic pressures are going to put enormous strain on the dollar in the decades ahead. I can’t tell you exactly how this plays out, but I expect it to look something like this…
The national debt is already closing in on $35 trillion. We’re adding an extra trillion every 100 days. That’s not sustainable. At some point, our lenders – the bond market – will balk, requiring a much higher interest rate to compensate for the higher risk of a borrower this deeply in debt.
At that point, selling bonds becomes prohibitively expensive… so the Federal Reserve steps in and effectively directly finances the government.
If you don’t have at least a couple dollar hedges in your portfolio, you’re risking your financial future.
One of the best and most reliable dollar hedges is gold. You could buy coins and keep them somewhere safe, of course. But for your IRA or other financial accounts, it’s generally going to be easier to buy an ETF like the SPDR Gold MiniShares (NYSEARCA:GLDM).
Protection Stock No. 3: Nvidia (NVDA)
And finally, throughout war, peace, inflation, deflation, and every manner of financial calamity, America’s biggest and best-run blue-chip companies have a way of surviving and thriving. This is why, at The Freeport Society, we call them the “rich man’s super currency.”
As a long-term wealth protector and grower, you need quality growth companies. One such company is the AI chip darling Nvidia (NASDAQ:NVDA).
This is a company that has redefined itself twice in the past decade alone, evolving from a maker of video game graphics chips to a maker of Bitcoin mining chips. Now it’s becoming the leading maker of the chips needed to power the AI boom.
The stock looks a bit rich at today’s prices, so you might want to wait for a pullback before jumping in. But regardless, always make sure that your portfolio has a core of quality growth stocks.
With these three stocks, and others along the same lines, you can prepare yourself from the fall out of the collapsing American family.
On the date of publication, Charles Sizemore held a LONG position in NNN and BTC-USD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines