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Social Mood , US Markets , Stocks , Economy

Here's Why Millennials Are Having Fewer Children

by Matt Lampert
Updated: May 09, 2018

WGN's Opening Bell: People making decisions to have kids, you might think that that would happen during a recession, not to have kids when money becomes tighter and jobs are at potential risk, but guess what? The research shows something different. People actually start planning to not have kids before that happens, and Matt Lampert is with us today. He's the Director of Research at the Socionomics Institute in Gainesville, Georgia, and Matt, good morning. Welcome to The Opening Bell.

Matt Lampert: Good morning. It's great to be with you.

WGN's Opening Bell: This is a cool piece of research study. First of all, let's tell people what a contraction is and when we might see one of those.

Matt Lampert: Sure, yeah. Basically an economic contraction is a reduction in GDP, a contraction in economic growth. It's a recession, and you tend to see these after long-term advances. So basically the economy grows, things start doing better in the economy, but then that trend changes, there's a shift, and we tend to not do so well after that. What we see in the births data is that this shift in psychology that shows up in the economy shows up first in people's decisions to have kids, and it's so counter intuitive but it's exactly what my colleague Robert Prechter expected to find about 19 years ago when he first did this research, and it was because he had a theory that anticipated this finding.

WGN's Opening Bell: Give us a sense. I mean, we've been in a real good expansion for about eight years now I guess, moving into eight years or maybe more than that. Is there some point at the end of one of those that we start heading into the contraction? Is there a mile post or how do we know? How do couples know to start stopping their planning of this I guess is the question?

Matt Lampert: Well, what we see in the stock market, if you look at trends in the market, when you get into the final wave of a major bull market, one of the telltale signs is you see less broad participation in that upward market trend. In other words, you have fewer shares participating in the rally, and that waning participation, that waning in breadth is a classic sentiment indicator. And if you plot market breadth against the conceptions data, what you find is a remarkable fit. Those two tend to have very similar trends. And so what we think is going on here, it's not necessarily that couples are consciously and rationally recognizing that, "Hey, maybe there's something afoot going on in the economy. Maybe we should delay having kids." Rather what we think is going on, it's really something more visceral and something based on a basic gut-level psychology here, where you have this shift from optimism to pessimism and that shift from optimism to pessimism can show up very quickly in the stock market. It only takes a few moments to trade a stock. It can show up fairly quickly in people's feeling of friskiness in the bedroom and it shows up eventually in the economy but those changes in the economy take longer to show up in the data because, gosh, if you expand or contract a business, that decision might take a long time to execute. You may have to hire or fire staff or change your location, change your inventory. So because those decisions take longer to execute, they take longer to show up in the data and so those trends tend to follow the trends in the market and in the conceptions.

WGN's Opening Bell: Are you seeing any of this happening now, Matt?

Matt Lampert: One of the things that's been so interesting about the recovery since the financial crisis, is that the narrative in the media for a long time was that it was a jobless recovery. We've seen that turn around here lately but as some researchers from Notre Dame mentioned in a recent paper, "Well, it's kind of been a baby-less recovery too." The conceptions data has been flat to sideways and so we find ourselves in a situation that we saw in the late 1920s and the bull market that preceded the Great Depression. We also saw it in the late 1990s in the bull market that preceded the bursting of the dot-com bubble. Where you've got these diverging trends. If history is any guide, it might be the economy driving the contractions in the future. That's not a forecast, it's just a historical observation.

WGN's Opening Bell: What's the role of millennials here. We talk a lot about millennials and their impact on the overall economy. I know there's some evidence that they have been delaying having families and getting married and doing all of those things that you would expect adults to start doing, how much will they be driving this?

Matt Lampert: One of the things that we've seen with the millennial population is that they're delaying starting families, they're delaying having kids and sociologist and economics can talk for hours and hours about the various cultural factors and social factors that might be driving this. But for us this is really just an issue of human nature. In social psychology we've seen these same trends play out time and time again and the millennials are just exhibiting the same tendency that we see in the data, again, in the late 1920s and the late 1990s. It could just be a Shirley Bassey saying, a case of history repeating.

WGN's Opening Bell: Your work is very interesting. Tell us a little bit about the Socionomics Institute. It's where our feelings and history and economics intersect, isn't it?

Matt Lampert: It really is. The basic idea behind socionomic theory is that the way people feel influences what they do so that when people are feeling more confident, more optimistic, they behave in a way that reflects that. So they bid up the prices of stocks, they tend to listen to more up-beat, more happy music. Themes in culture and entertainment tend to be lighter, more family friendly but when that psychology changes, so does the behavior. So when social mood changes from positive to negative, that negative outlook, that negative feeling shows up in the behavior too. We tend to see declining stock prices, darker themes in culture and entertainment, the economy does a little bit worse. We tend to have more turbulence on the political scene because these are social events. They have to come from somewhere. They come from people who have feelings so if you know how they're feeling, you've got a leg up on understanding and anticipating the behavior.

WGN's Opening Bell: There are some economic reports that we report on regularly, consumer sentiment, other things, how people are buying stuff, retail sales. What do you look at? What of those economic reports do you look at and is there really a good gauge of how we're all feeling at any moment about the economy?

Matt Lampert: We find that the stock market itself is one of the best indicators of social mood. One of the great things about it is that we've got the data going back centuries in some countries so we can back test the theory and also get the real time updates. But we also look at other indicators as well. Consumer sentiment is one of those. You can look at all kinds of different economic reports but we find that those tend to lag the trend of the market. So when we want to get a leg up on what the future's likely to be, we generally keep our eye on the major equity indexes worldwide and it tends to give us a pretty good heads up on what's ahead.

WGN's Opening Bell: Matt, this is a great piece of research and good information. We appreciate you being with us this morning here on The Opening Bell.

Matt Lampert: My pleasure. Hope you have a great day.

WGN's Opening Bell: You too. Matt Lampert, Director of Research at Socionomics Institute down in Gainesville, Georgia. You can find more about them at and follow them on Twitter as well @socionomics.

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