New report says pregnancy rates can predict recessions

A new study says the rate of pregnancies can potentially predict an upcoming economic downturn. Photo / 123RF

The smartest business leaders I know are always looking ahead. If the economy is on a good track, then they make investments to grow. If there are signs of a downturn, it may be time to conserve cash and circle the wagons.

But how best to tell? The Fed's actions? Unemployment trends? Durable orders? Economists and pundits rely on many different types of data. So why not . . . pregnancy rates?

The idea is not so far-fetched. As reported on BBC News, a new study says the rate of pregnancies can potentially predict an upcoming economic downturn.

The authors of the report tracked more than 100 million births, miscarriages and abortions in the United States from 1989 to 2016. Their findings: conception rates drop several months before even more recognisable signs of an economic downturn occur.

"We were surprised when we saw [the correlation] and then we were surprised no one had noticed it before," Daniel Hungerman, one of the authors, said in the BBC report.

Hungerman believes the reason is that when people are less optimistic about the economic future they'll tend to hold off on bringing new babies into the world. And people seem to know these things better than business executives.

Using the last Great Recession as an example, Hungerman wrote that while business leaders were still saying they were optimistic even in December 2007, right before the collapse of the investment firms Bear Stearns and Lehman Brothers.

Meanwhile, birthrates had already been dropping off for several quarters. More interestingly, fertility rates before the 2009-2009 recession dropped even more precipitously than rates before less the less damaging downturns in the early 1990s and 2000s.

So how can this data help business owners and leaders predict the next downturn? It can't because it's too difficult to track pregnancies in real time.

But the report's authors say that other data - for example the sale of fertility and pregnancy related products - could be a potential indicator and another future economic metric to follow.