Capitalism in Need of Families

Add this one to the ever-growing number of articles on the dicey relationship between modern US capitalism and the family. Our economy discourages large families, but it turns out that, in doing so, it actually harms itself:

The thing about an increasingly childless economy is that it has major implications for consumption. Just look at this new data from a Gallup survey released today on the average daily spending of families. Even after you control for income, age, education, and marital status, families with young kids spend more every day. These are the sort of spenders you want in a weak economy following a great deleveraging.

…The drop in U.S. fertility rates in recent years has almost certainly had a negative effect on consumer spending (and, in turn, lower birthrates are probably an outcome of the recession). In particular, childless couples don’t need space for more kids so they’re less likely to buy homes in the suburbs, depressing demand for housing in an economy that badly needs to sell more homes.

But in order to “solve” this problem, we would need to find a way to encourage larger families. And to that, you would have to discourage personal consumption as the primary motivational tool in Americans’ lives. That’s some catch there.