Stan Veuger explores the economic impact of declining American fertility.
In 2024, the U.S. fertility rate reached a new low of 1.6. Net immigration started declining rapidly that same year and quite possibly turned negative in 2025. This combination of factors has brought the rate of population growth to a historic low, a development with major economic implications.
Perhaps the most obvious consequence is lower overall output growth. Economic growth can come only from an increase in the labor force or more output per worker. In the U.S., the latter has averaged about 2 percent annually over the past century, with variation that does not correlate in an immediately obvious way with labor force growth. It is therefore reasonable to expect a slowdown in labor-force growth to translate directly into slower economic growth. If labor force growth goes from 1 percent per year to 0 percent, we can expect economic growth to go from 3 percent to 2 percent. Over time, this adds up to a much smaller aggregate economy, likely accompanied by lower interest rates.
And U.S. labor force growth has in fact come down in tandem with population growth. In 2023, the Bureau of Labor Statistics projected that population growth would average 0.6 percent between 2023 and 2033, while the labor force would grow at an annual rate of 0.4 percent. Compare that to the 1960s and 1970s, when population growth was around 1.8 percent and labor force growth topped 2 percent annually. The Congressional Budget Office projects that deaths will start to exceed births in 2030, and it assumes that net migration will be high enough to offset this natural population decrease until well into the 2050s. Without positive net migration, though, the total population would start to shrink around the end of President Donald Trump’s second term.
If anything, the BLS and CBO projections, like other such efforts, are overly optimistic.
