The fertility crisis is here and it will permanently alter the economy

London CNN —

The world needs more babies.

Falling fertility rates have long been a concern for economists worried that agingsocietiescould diminish the labor force, further exacerbate inflation, upend the consumer culture upon which mature economies depend and overwhelm government programs meant to care for aging populations.

Those changes are now upon us. A new study by the Organisation for Economic Co-operation and Development (OECD) says that declining birth rates will permanently alter the demographic makeup of the world’s largest economies over the next decade.

What’s happening: If forecasts hold up, 2064 will be the first year in modern history where the global death rate surpasses the birth rate.

But the world’s largest economies are already there: The total fertility rate among the OECD’s 38 member countries dropped to just 1.5 children per woman in 2022 from 3.3 children in 1960. That’s well below the “replacement level” of 2.1 children per woman needed to keep populations constant.

That means the supply of workers in many countries is quickly diminishing.

In the 1960s, there were six people of working age for every retired person, according to the World Economic Forum. Today, the ratio is closer to three-to-one. By 2035, it’s expected to be two-to-one.

Top executives at publicly traded US companies mentioned labor shortages nearly 7,000 times in earnings calls over the last decade, according to an analysis by the Federal Reserve Bank of St. Louis last week.

“A reduction in the share of workers can lead to labor shortages, which may raise the bargaining power of employees and lift wages — all of which is ultimately inflationary,” Simona Paravani-Mellinghoff, managing director at BlackRock, wrote in an