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NEWSWIRE: 5/20/19

  • Provisional data indicate that the number of births in the United States declined for a fourth consecutive year in 2018, falling to the lowest level since 1986. The U.S. total fertility rate declined as well in 2018, driven by the continued baby bust among all age brackets under 35. (Centers for Disease Control and Prevention)
    • NH: I've been anticipating the basic thrust of these final 2018 figures for a while. (See "Is the U.S. Fertility Decline Permanent?") But the headline numbers are still attention-grabbing--and rightly triggered big stories in The Wall Street Journal, The New York Times, and The Los Angeles Times.
    • Highlights? In 2018, total births fell for the fourth year in a row. Excluding a one-year, mildly positive "head fake" in 2014, this is the ninth declining year in a row since 2007--just before the Great Recession. General fertility and total fertility rates are basically following the same trend. One milestone is especially worth noting: In 2018, the total fertility rate dropped to 1.728--which is below its previous historical low (1.765) set in 1976. This occurred at the bottom of the Watergate-era birth-dearth that gave rise to "baby bust" Gen Xers. (The total fertility rate is a pure measure of behavior: It reflects the average woman's fertility at every age and is thus unaffected by changes in the age-distribution of women.) So last year we did indeed move into uncharted territory.
    • The latest CDC data show no end in sight. The figures for Q3 of 2018 actually show an accelerating YoY rate of decline in births to all women age 15 to 44. And that decline continues to be negatively correlated with age. In other words, the younger your age bracket, the bigger your fertility drop.
    • The WSJ story summed up the causes of fertility decline as follows: "Experts say the continuing declines appear to be rooted in several trends, including teenagers and unmarried women having fewer babies, lower Hispanic fertility rates, and the rise in women obtaining college degrees." That's a fair summary. The biggest driver by far is the steep decline in fertility among younger women--not just teenagers (where the drop has indeed been dramatic), but also in the 20-24 and 25-29 brackets. The disproportionate fall in Hispanic fertility, combined with declining Hispanic immigration, simply compounds this trend. (See "Hispanic-American Birthrate Plummets.")
    • As for the role of more women seeking more education, I'd say a more comprehensive explanation would point to Millennials of both genders doing a lot more than earlier youth generations to avoid risks, plan ahead, lead structured (closer-to-home) lifestyles, and avoid having babies until they're absolutely ready for them. While the use of long-term contraceptives (like IUDs) is rising, both sexual activity and abortions are declining. There is little or no fall in Millennials' willingness to "eventually" have children, but limited opportunities for upward economic mobility seems to create indefinite deferral. (There's a growing gap, in surveys of young women, between their "ideal" and their "intended" number of kids.) More education can actually boost fertility by enabling Millennial couples to create economic security (e.g., get married and buy a home). Among the most educated Millennials, relative to their Boomer and Xer predecessors at the same age, fertility rates are rising and childless rates are actually falling.
    • Citing the undaunted desire of Millennials to have kids, some pundits still insist that the verdict is not yet in. Just wait, they say. Millennials are having kids at older ages, but eventually, we're going to see a make-up rush of baby-making. Call me skeptical. Very skeptical. We're now in the 10th year of an economic recovery. What are these Millennials waiting for... the next recession? What's more, nearly 15 million Millennial women are now over age 30, when potential fertility begins to fall (see "Sex Ed... with a Twist"). Every quarter I keep looking for an uptick in the age 30-34 fertility rate--which is where this make-up rush would first manifest itself. It still hasn't appeared. Demographers do allow for a "tempo effect" (when women catch up on their intended fertility after, say, a war or a recession). But demographers also have a saying: As time goes by, fertility delayed is fertility denied.

U.S. Fertility Passes Another (Ominous) Milestone. Newswire - May 20 chart2

U.S. Fertility Passes Another (Ominous) Milestone. Newswire - May 20 chart3

U.S. Fertility Passes Another (Ominous) Milestone. Newswire - May 20 chart4 

  • In Taiwan, a startup called 9floor is taking co-living to the next level with a new housing scheme that pairs Millennials with retirees. The initiative is meant to address both the country’s affordable housing shortage and its aging population—and if successful, it could be coming to a city near you. (South China Morning Post)
    • NH: OK, this is partly a story about the high price of real estate in core urban areas, the rising desire of young adults to live in those areas, and the limited income of those young adults (relative to the older adults who already live there). You could say that co-living is simply a rational response to all parties concerned. In a world in which the economic fortunes the elderly are improving a lot faster than the those of the young (see "The Graying of Wealth"), it makes sense for the young to sacrifice their independence and move in with the old.
    • Yet there's a deeper generational point that shouldn't be overlooked. More than other recent youth generations, Millennials really don't mind living with older generations. In the developed world, after all, a record share of them are living with their parents. Older folks are stable, conventional, and avoid risks--just the sort of lifestyle that many Millennials are seeking. Many of us are old enough to recall young Boomers who would just as soon starve under bridges rather than move in with "uncool" older folks. (How many young Boomers ever moved back with mom and dad during the devastating Reagan recession of 1982-83?) Now, apparently, the older folks--Boomers--are cool enough for Millennials. Welcome to intergenerational co-living. Yes, we're seeing it in America (see "Does Co-Living Threaten the U.S. Housing Market"). And we're seeing it in Asia.
  • After years of steady increases, the share of Americans who support same-sex marriage (61%) appears to have stalled. This figure is slightly down from two years ago (62%) among all demographic groups, though Millennials (74%) and the religiously unaffiliated (79%) continue to lead the way in their support. (Pew Research Center)
    • NH: Interestingly, the two-year decline encompasses both political parties, all races, and all religious affiliations. The only differing trends were among men (down decisively) versus women (still rising); and among Boomers and Xers (down decisively) versus Millennials and Silent (steady or rising).
    • Pew does not speculate on reasons for this shift. It may be a delayed public reaction to the Supreme Court decision in 2015 and the multiple state initiatives legalizing state marriage in the years following. Same-sex marriage, which normalized homosexuality in a way that appealed (perhaps for different reasons) to both liberals and conservatives, may have taken the edge off the issue in the mind of the public. African-Americans remain the most likely to disapprove of same-sex marriage, perhaps due to their significantly higher religious affiliation. (See "Rise of the Religious 'Nones'").

U.S. Fertility Passes Another (Ominous) Milestone. Newswire - May 20 chart5

U.S. Fertility Passes Another (Ominous) Milestone. Newswire - May 20 chart6

U.S. Fertility Passes Another (Ominous) Milestone. Newswire - May 20 chart7

  • Brands like KFC are rolling out “computer-generated influencers,” which are quickly gaining traction among social media followers. Remarkably, even influencer marketing—originally envisioned as a way for brands to build a human connection with followers—is prone to automation. (Cassandra Report)
    • NH: At a time when nobody trusts big brands, the value of trusted personal "influencers" has climbed. These are friends, family members, coworkers, reviewers, or people who are widely admired and followed on social media. In their effort to capture that value, big brands have given birth to the so-called trust economy (see "Under the (Social) Influence"). At the apogee of this economy stands the likes of 21-year-old Kylie Jenner, the world's youngest billionaire. At the bottom toil millions of young people who earn a pittance in return for hawking this or that to their limited networks (see "The Rise of the 'Nanoinfluencer'").
    • Marketers have always known there's something contradictory about paying influencers for promoting products to followers who know they are getting paid. If they're getting paid, where's the trust? But the rise of CGI influencers may be throwing into doubt the whole premise behind the trust-economy model. Since everyone knows the CGI influencer is not a person, the influence probably has nothing to do with trust at all. Maybe it's just a spectacle. Or entertainment. Or prominence. And maybe the whole paid trust economy model isn't so different from the old paid-celebrity model after all.
  • Contributor Elizabeth Weise asks whether climate change will be “the new Vietnam War” for Gen Z. Even if climate change does turn out to be the defining issue for today’s youngest generation, their pragmatic, mild-mannered brand of activism will bear no resemblance to the fiery Boomer-led demonstrations that served as the backdrop for the Vietnam War. (USA Today)
    • NH: Are Millennial activists like Boomer activists? I've covered that questions elsewhere (see The Similarities and Differences Between Boomer and Millennial Activism"). Among the clear contrasts, I pointed out that whereas young Boomer activists wanted to upset conventional wisdom, defy their parents, repeal (or break) laws, foment polarization, and give freer rein to individuals, Millennials--and now Homelanders--want to do the reverse. They push causes (like gun control or climate change mitigation) that are widely supported, make common cause with their parents, enact new laws to ensure better behavior, favor consensus, and seek ways to corral individualism.
    • Nowhere is Homelander activism on climate change better exemplified than in Greta Thunberg. An instant global celebrity, this 16-year-old Swede is leading millions of youth worldwide to participate in peaceful demonstrations in favor of such solutions as persuading more political leaders to listen to--and believe--the findings of mainstream climate science. (Young Boomers wanted to tell the best and the brightest to go to hell.) Her supportive parents, who say they are "converts" to her cause, are themselves progressive celebrities who have links to for-profit environmental businesses. Tellingly, the most vitriolic attacks on Greta are coming not from conservative climate skeptics on the right but from "hard green" radicals on the left.
  • Fans of thematic investing can now place a bet on Millennials in the form of the Global X Millennials Thematic ETF. Companies beloved by Millennials are primed to outperform: The fund, which includes prominent tickers in industries from social media to clothing and apparel, is up 26.4% on the year. (ETF Trends)
    • NH: Well, why not? Thematic investment is all the rage, so here you can go with "Millennials" as your theme. If this theme sounds pretty amorphous and ill-defined, that's because it is. (Motif offers other examples.) Most of these so-called Millennial portfolios focus on consumer goods and services whose market demo tilts young. There's seldom any real effort to figure out what Millennials will be consuming in midlife that they aren't consuming now--much less any forecast of how the mix of industry cap ex and infrastructure is likely to change long term in the "Millennial economy." Most of their holdings are pricey, well-known, high-mo, and high beta tickers. Sure, they've performed well recently. Just let me emphasize that last word: recently.
  • With the number of 55+ travelers growing fast, airports and hotels are taking steps to make them as comfortable as possible. For Boomers, this not only includes increasing accessibility but also considering their kids and grandkids: Marriott, for instance, is introducing new room layouts designed for multigenerational travel. (The New York Times)
    • NH: I've become a bit skeptical of these stories about how the travel industry is rushing to accommodate this or that new social trend. Come on. It's been 20 years since the introduction of laptops and 10 years since the widespread adoption of mobile phones--and most hotel rooms still have few convenient plugs for recharging and bulky land phones next to the bedstand. As for airports and airplanes, the reader comments on this story are illuminating. If the industry is so concerned about seniors, why are they so reluctant to improve the experience for travelers of all ages. Sure, who wouldn't benefit from better signage, less overbooking, more legroom, closer gates, flight announcers who can speak English, and all the rest.
    • Expanded room layouts are indeed a demographic (and generational) trend coming to the lodging and cruise industries. Firms are adjusting to the multi-generational family--whose vacations are increasingly financed by the grandparents. As for airlines? Not much hope of change here. Some of us remember airlines back in the pre-Reagan years when regulation gave the public much better service in return for much higher fares. More of us remember the 1980s and 1990s when intense competition gave the public somewhat better service in return for chronic negative profit margins. Today, in return for reasonable fares in the hands of a profitable and sustainable oligopoly, we get miserable service. Lo, the market hath spoken.
  • Facebook is close to rolling out a “clear history” tool that will allow users to erase the data Facebook collects from other sites and apps. It’s the social network’s first privacy feature that could hurt its advertising business—but given that it’s opt-in, digital advertisers can still hope that most people won’t actually use it. (Advertising Age)
  • A new piece explores the forces keeping fertility rates stubbornly low in China despite the government’s embrace of pronatalist policies. No amount of encouragement or incentives can change young people’s views that raising more than one kid is too expensive, especially considering the resources that parents are expected to pour into each one. (The Washington Post)
    • NH: In my recent comments on China's falling birth rate (see "China Embraces Pronatalism--Decades Too Late"), I pointed out that no demographer was surprised by the recent decline--nor by how little the end of the one-child policy slowed the decline. Many demographers foresaw this drop twenty years ago. Even Chinese demographers foresaw it. It's just that political intimidation prevented them from speaking up. This is a story well told by Fuxian Li, a medical doctor whose views about one-child forced him into exile in America. (His 2007 book, Big Country with an Empty Nest, was banned in China.)
    • Well now, at last, the official line is changing, one-child has been repealed, and Li's views are suddenly the new mainstream. I predict that China will go the route of every other authoritarian regime that suddenly wakes up to its low birth rate: It will engage in increasingly aggressive pronatal policies, including new benefits and tax favors for mothers plus glorious "social credits" that improve their social standing. (See “Nations Labor to Raise Their Birthrates.")
    • But will all that be enough? Hard to say. It turns out that the government's propaganda, which goaded the public for years with lines like "if you want to become rich quickly, have fewer children," may have worked all too well. Roughly a third of viable pregnancies in China are still being terminated by abortion--a much higher share than in the U.S. Very low fertility rates are common throughout much of East Asia (e.g., Taiwan, South Korea, Singapore, Japan), mostly Confucian societies that have also widely accepted the get-rich-with-fewer-children philosophy even though their governments have never enforced it.
  • An ominous new report by the Social Security board of trustees shows that the fund’s yearly expenses are expected to exceed its income (including interest on the trust fund) beginning next year. The message is clear: Politicians who have been kicking the can down the road for decades must come together now in search of a solution. (The Washington Post)
    • NH: Chuck Blahaus, the author of this op-ed, is a former Social Security trustee and a good friend. I totally agree with everything he says. And in fact, I totally agreed nearly forty years ago when I first started writing on this issue. Even soon after the Greenspan Commission reforms were legislated back in 1983--which mainly resulted in Boomers getting taxed a lot more and receiving less in future benefits--everyone knew further reforms would be required.
    • I guess where I've changed is in my understanding of how the political process works. Legislators will never come together one bright sunny day to act upon the grim forecasts of actuaries, however much these forecasts are believed. Even today, so long as the sun is shining, most of the "reforms" that either party is willing to discuss involve bigger benefits or payroll-tax reductions. Rather, Social Security (and Medicare, whose unfunded liabilities are much vaster if less precisely defined) will be reformed on a rainy day and in the face of fiscal and economic crisis. And when that happens, benefit expansion will just one of many items on the table. Also, there will be debt reduction, tax hikes, and massive benefit phase-outs to those declared non-needy--all designed to create new fiscal room for the priorities of rising generations.

    DID YOU KNOW?

    Employers Work to Reduce Stress Levels. Anxiety is a major problem among today’s teens and young adults. (See: “Did You Know? An Epidemic of the Mind.”) According to the American Psychological Association, more than half of all workers under age 23 (54%) say they felt anxious or nervous due to stress in the preceding month. As such, employers have been forced to implement strategies designed to reduce stress and promote mental health. PricewaterhouseCoopers encourages employees to discuss mental health issues openly and offers online meditation sessions for its workers. Furniture design company Herman Miller employs onsite social workers who offer confidential counseling, and trains employee volunteers to spot signs of anxiety among colleagues. VaynerMedia even employs a “chief heart officer” whose job it is to foster a low-stress work environment. All in all, 12% of employers now offer online stress-management programs, up from just 7% in 2017. VaynerMedia “CHO” Claude Silver says, “I want to create a culture of belonging, where people feel physically and psychologically safe.”