Americans aren't having enough kids. That's bad news for the economy — and immigration may be the answer.

• The US population is expected to peak later this century. That's bad news for the economy.
• China, Japan, and Italy are struggling to address low birth rates.

Some of the world’s largest economies are grappling with a new problem for the first time.

China, Japan, and Italy are all battling dwindling birth rates — and their struggles are a reminder of an issue that could eventually become a problem for the US. The issue meant China last year lost its crown as the world's most populous country to India — a record it'd held for almost 75 years, according to the United Nations.

The Census Bureau predicts the number of Americans to peak in 2080, meaning that some of today's millennials and Gen Zeds might one day find themselves part of a shrinking population.

Economists say there are only two ways to stop that becoming a reality: either convince already-reluctant young Americans to have more kids, or keep immigration high.

Economic headache

Millennials and Gen Zers are far more skeptical about starting a family than previous generations, with some pointing to a lack of financial stability and a potential climate crisis as factors.

As a result that’s led to fertility rates plummeting. The average American woman is having just 1.6 children on average, per World Bank data — well below the figure of 2.1 that demographers say is needed to keep a population stable.

While that might be good for the environment, it’s a bad omen for the economy. The labor force is likely to shrink as the birth rate falls, while it becomes more expensive for the government to support an aging population.

“You basically just haven’t got enough new people coming into the workforce, and you’ve also got an aging demographic,” Marc Ostwald, chief economist for ADM Investor Services International, told Business Insider. “That’s where the equation lies — how quickly is a country replenishing its labor market, and how much of a burden are retirees?”

The idea that low birth rates could threaten the economy has also taken off among tech bros, with figures including Tesla CEO Elon Musk frequently ringing the alarm about “population collapse.” Musk has also repeatedly signaled his support for pronatalism, a movement that calls for people to have more kids to supposedly save civilization.

Slowdowns elsewhere

Two other countries in the G7 — a group of the world’s richest economies — have already felt the impact of population declines.

Japan, which unexpectedly slipped into recession last week, is suffering from a well-publicized fertility crisis. Japanese women have an average of just 1.3 children, way below the number needed to maintain the population. Economists have warned the decline could trigger future labor market shortages.

Meanwhile, economists have warned for years about plunging birth rates in Italy. Forecasters expect its population to plunge from 59 million to just 48 million by 2070, despite the ruling far-right Brothers of Italy party’s attempts to address the long-running crisis by making parenthood “cool” again.

China has also struggled to raise its birth rate. In 2023 its population fell for the second consecutive year after decades of rapid growth. That could weaken the power of its massive workforce, fuel declines in consumer spending, and put millions of teachers out of a job.

Immigration can help the US

The US population isn’t contracting yet — but low birth rates in other developed countries is a reminder of what may lie down the road.

One factor the world's largest economy has in its favor is immigration. By 2040, more Americans will die than be born each year, according to Congressional Budget Office projections. However, high immigration levels are expected to keep the population growing, albeit at a slower pace.

“The US population is still growing because of immigration, even at a time when that’s the subject of heated debate,” said ADM’s Ostwald. “Japan, in comparison, has never tolerated a migrant population — and that’s exacerbated its problems.”

He added that the 2024 presidential election could be even more crucial for the economy. Republican frontrunner Donald Trump slammed Mexican immigrants in his 2016 campaign, and has recently tried to turn the border crisis into a political football to be used against his likely Democrat opponent Joe Biden.

“Trump's objective is to actually slow migration very dramatically into the US — and those sorts of views could dramatically change the dynamics of the economy,” Ostwald said.

Congress has also played up the potential for immigration to boost the economy over the longer term.

Immigrants “help counteract the slowing growth rate of the US population, which helps drive the expansion of the labor force and contributes to overall economic growth,” the Joint Economic Committee, chaired by Democrat senator Martin Heinrich, said in December 2022.