A midlife crisis takes shape in the US

A country obsessed with youth must grapple with its declining birth rates

Rana Foroohar

   © Matt Kenyon


Demographics is destiny. 

For decades, America has enjoyed the economic and geopolitical fruits of its high birth rate. 

Between 1990 and 2010, fertility levels in the US were higher than the average for any developed country with the exception of Israel, Iceland and New Zealand.

So what does it mean that the US birth rate is on track to plunge below the recent trend rate of Europe? 

In 2007, just before the great recession, the US total fertility rate, meaning the number of births that a woman is expected to have in her lifetime, was 2.12. 

By 2019, just before Covid-19 struck, it had fallen to 1.71.

Provisional Centers for Disease Control and Prevention data from 2020 shows that the total fertility rate has since dropped to a record low of 1.64, roughly the rate in Europe over the past five years. 

If the trend holds, as it is likely to given last year’s lockdown (it’s tougher to get pregnant during a pandemic unless you were already with a partner), then the New World may have lower fertility than the Old as soon as this year. 

So much for what the economist Nicholas Eberstadt dubbed America’s “demographic exceptionalism”. 

For decades, the US birth rate helped buoy growth, which is a function of people and productivity, and global status. 

But according to a new report by the Global Ageing Institute and the Terry Group, all the factors that have propelled America’s outlier fertility — from immigration and religious faiths to long-term economic optimism — are now in decline.

Richard Jackson, head of the GAI and author of the report, notes that a degree of humility is required among demographers (“nobody saw the Baby Boom coming”). 

Yet there is little reason to think that the birth rate in the US is going back up any time soon.

Yes, the massive post-Covid stimulus has buoyed animal spirits. 

But the millennials “are a scarred generation”, says Jackson, having come of age during the great financial crisis of 2008 and the pandemic. 

“People tend to have children when they feel they are economically secure,” he notes. For young people loaded with debt, unable to buy homes and start families on the same timetable as their parents, that feeling is elusive.

The decline in birth rates has been particularly steep among Hispanics, which Jackson and some other experts attribute to a feeling of economic and cultural vulnerability, which was certainly heightened during the xenophobic years of Donald Trump’s presidency. 

Net immigration, which bolsters the overall fertility rate, has declined to roughly half of what it was five years ago, even as the cost of having a child and caring for it has increased.

Joe Biden has, of course, made healthcare, education and childcare a huge priority for his administration. 

This is good for job creation and productivity, and may also help the birth rate at the margins if women feel that it’s easier for them to balance work and family.

But the record of “pro-natal” policies to increase fertility is spotty. 

Many countries in Europe, for example, have a far better social safety net and state-funded childcare systems than the US, and yet smaller families have become the new normal.

It may be that bolstering growth in general, and thus a sense of economic optimism, is ultimately a better way to kick up the birth rate, an argument that Republicans concerned about the Biden stimulus plan have been making.

This goes to the fact that the US will need creative, bipartisan thinking to address the magnitude of its demographic slowdown, and the potential economic and geopolitical consequences. 

Declining demographics, and the costs associated with them (such as caring for the elderly and the debt burden from Medicare and Social Security), are a big reason that the Congressional Budget Office predicts lower productivity and slower growth for the US in the future.

Getting women who’ve taken a disproportionate hit from Covid-19 related unemployment back in the workforce is an important way to shift the tide. 

But so is making immigration less restrictive, and finding ways to put older people who have high levels of education and experience back into the labour market. 

“Older people are not only America’s greatest underutilised resource, but also the fastest-growing segment of the population,” says Jackson.

We need them, and they need work. 

The post-pandemic asset boom coupled with labour-force disruptions have led many boomers to retire earlier than they might have. 

But given that the median retirement savings in 2019 for Americans between the ages of 55 and 65 was a mere $144,000 per household, it’s hard to imagine that working longer isn’t the new normal.

The public sector could help to nudge older people into the workforce with policy tweaks like reduced payroll taxes for the elderly, or by making Medicare, rather than private insurance, the priority healthcare for older Americans.

Currently, private insurance is the first port of call for those still employed. 

This creates costs for companies, which might be willing to hire more older people if they weren’t also taking on the direct burden of their healthcare costs.

For most of its history, the US has been obsessed with youth. 

Its future may be defined by how well it ages.

This Investing Strategy Brings Growth and Reasonable Yield

By Carleton English

Coca-Cola has solid growth and yield prospects, Jefferies says, in what would amount to a turnaround play with upside. Here, a Coke bottling plant. / ERIC PIERMONT/AFP via Getty Images


It may take some time for global travel to return to prepandemic levels, but that’s no reason to keep all of one’s investments on this side of the pond—particularly for income-hungry investors.

Global dividends are poised to rise 12% to $1.7 trillion in 2021, according to a recent analysis by Jefferies Financial Group, snapping a three-year streak in which dividends hovered around $1.5 trillion. 

The U.S. accounts for nearly a third of this year’s projected dividends but is expected to see only 3% growth. 

Europe and emerging markets are projected to post the strongest dividend gains this year—up 23% and 22%, respectively—as the regions, which saw payouts take a hit last year, are poised for recovery from the pandemic.

“In our view, markets are underestimating the potential for dividend recovery. As the world opens up post-Covid, we believe that dividend recovery will surprise investors,” writes Desh Peramunetilleke, head of global microstrategy at Jefferies.


With financial markets recently turning volatile as last year’s popular tech trade unwinds and the CBOE Volatility Index, or VIX, climbs to its highest level in two months, investors should be on the hunt for more value-oriented plays. 

While the U.S. offers opportunity for income investors, particularly in last year’s hard-hit sectors in consumer discretionary and materials—both of which are expected to increase dividends by more than 10%—the real gains will be overseas.

Peramunetilleke advises using the GARY strategy—growth at a reasonable yield—to find opportunities. 

“We believe that long-term investors should focus on companies that offer the best of both worlds in terms of yield and growth,” Peramunetilleke writes.

Highflying tech names that propped up the market last year are falling out of favor as valuations get stretched and yields rise. 

But there are still plenty of companies that are able to thread the needle of providing a reliable dividend while also growing.

Screening for GARY stocks involves sorting out companies with healthier dividend-payout ratios—namely paying out less than 80% of earnings in dividends. 

While 80% is the metric, it’s worth noting that many companies in Jefferies’ analysis have payout ratios below 50%.

The companies must also have a demonstrated history of maintaining its dividend. 

Jefferies has been looking at data going back as far as 26 years—though some companies are newer—and has marked companies that have instances of slashing their annual dividend by more than 5%.

From there, the Jefferies team examines companies with market capitalizations in excess of $2 billion, with a 12-month projected dividend yield above median in their respective regions, and a compound annual growth rate for earnings per share for 2021 and 2022 in excess of 10%.

Some names may catch investors by surprise in light of recent headlines. 

But when accounting for the companies’ comparatively lower payout ratios and dividend sustainability, the opportunities look compelling for long-term investors.

Topping the list of opportunities is Taiwan Semiconductor Manufacturing (ticker: 2330.Taiwan), which currently yields 1.8% and is expected to see growth in EPS of 12.4%. 

To be sure, shares of the world’s largest chip maker have faltered in recent weeks amid the much broader global chip shortage.

South Korea-based Samsung Electronics (005930.Korea) also tops Jefferies’ list with its 2.2% yield and projected EPS growth of 36.3%. 

It also is facing a challenging patch due to the global chip shortage, warning in March that it could cause a “serious imbalance” in supply and demand.

Outside of Asia, investors can find compelling opportunities in Europe, namely in Siemens (SIE.Germany) and AstraZeneca (AZN.UK).

Siemens’ shares are up 18.5% this year and the industrial conglomerate recently lifted its guidance and topped analyst expectations when reporting fiscal second-quarter results earlier this month. 

The stock yields 2.6% and EPS should grow 21.6%. The company has been seeing growth from China as well as from the automotive industry and its software business.

AstraZeneca offers some value for income-oriented investors even after its Covid-19 vaccine has fallen out of favor. 

Shares are up 9% this year and investors get a 2.7% dividend yield. 

In the first quarter, the company posted 7% revenue growth, excluding a 4% gain for its Covid-19 vaccine.

Barron’s brings retirement planning and advice to you in a weekly wrap-up of our articles about preparing for life after work.

Of course the U.S. still offers opportunities in familiar names for investors looking for income while also providing global exposure.

JPMorgan Chase (JPM) is a favorite as it has already benefited from the rebound in financial stocks and is projected to do well as interest rates rise. 

Like all big banks, JPMorgan had to halt its buybacks and cap dividends in 2020 as the Federal Reserve ordered banks to conserve capital during the depths of the pandemic. 

But those restrictions are expected to ease on June 30 following the completion of the Fed’s annual stress test. 

JPMorgan currently yields 2.4%, and the bank is expected to increase EPS by 16.1%.

Coca-Cola (KO) with its 3.2% yield and projection of 9.9% earnings growth, just fits into Jefferies’ screen. 

Shares are flat this year as some of the hopes of swift reopening fizzled in the earlier part of the year. 

The company works as a turnaround story as it culls underperforming brands and as a reopening play as theaters and sporting venues once again can host spectators. 

With sales in more than 200 countries, Coca-Cola is also a play on improving emerging-market trends while staying domiciled in the U.S.

While investors may want to go global for income opportunities, there’s reason to keep at least one foot planted in the U.S.

The Pandemic’s Legacy of Financial Frailty in Emerging Markets

Critics of public debt accumulation usually mean well, but in many cases the alternative is steeper borrowing by individuals and companies

By Mike Bird

South Korea is an economy that had more room to provide fiscal support./ PHOTO: AHN YOUNG-JOON/ASSOCIATED PRESS


Debt levels rose in almost every corner of the world last year, but how the burden is shared between governments and the private sector varies widely. 

Some countries may come to wish the mix of borrowers was a little different.

In several economies classified as emerging markets—notably Thailand, China, Malaysia, South Korea and Russia—the increase in private nonfinancial debt to gross domestic product ran to more than 10 percentage points in 2020, according to figures released by the Bank for International Settlements Monday. 

In some, a sharper fall in GDP is doing more of the work in shifting that ratio, but the outcome is the same: more private debt relative to economic output.


Emerging markets have typically seen more limited increases in government debt than their developed counterparts. 

Most countries aren’t in the position of the U.S., U.K. or Japan, which are able to expand state spending rapidly without worrying about undermining the value of their currencies and creating inflationary pressures. 

In some cases, governments could have taken on more debt, but chose not to.

Based on last year’s evidence, though, the inability or unwillingness of states to borrow and spend may have resulted in a more precarious financial position for their private sectors. 

During a major economic shock such as the pandemic, avoiding a large recession requires some sector or other having to borrow large amounts of money.

Of course, government borrowing isn’t a substitute for private borrowing. 

In most advanced economies, the U.S. included, private debt has risen in the past year. 

But lower government borrowing will lead either to higher private borrowing or a bigger economic shortfall.

South Korea is perhaps the most obvious case of an economy that had more room to provide fiscal support. 

The government has expressed pride in the fact that its debt load rose so little last year: 

The BIS numbers show an increase of just 4.5 percentage points relative to GDP, far less than in most economies. 

But South Korea is at the higher end of the international spectrum when it comes to both nonfinancial corporate and household debt, which rose by 9.2 and 8.6 percentage points respectively in 2020.

Accumulations of private debt are typically a much greater financial risk to economies than larger government deficits. 

Corporate debt has risen in particular among riskier firms over the past decade, with lower interest coverage ratios. 

Any rise in debt-servicing costs could cause widespread distress.

Private borrowing also doesn’t do much for growth. 

Research published by the Asian Development Bank in 2018 looked at the effect of corporate and household debt buildups on economic growth, and found similar results to studies for advanced economies: Some increases raise economic growth in the short run, but then growth tends to fall over the following one to three years.

Critics of public debt accumulation usually mean well, but in many cases the alternative to steeper borrowing by governments is steeper borrowing by individuals and companies. 

Some emerging markets had little choice in their response when the pandemic began last year. 

But others may wish that they had let government borrowing capacity take a bit more of the strain. 

Private debt could prove to be a bigger problem in the long run. 

Multilateralism or Bust

Crises such as climate change and COVID-19 require multilateral responses, and a critical mass of countries can alter the course of events, for better or worse. Despite current geopolitical tensions, leaders must not lose sight of major global threats – and of the need to find common ground.

Javier Solana



MADRID – In early 1981, a few days before Jimmy Carter handed over the US presidency to Ronald Reagan, a short story on page 13 of The New YorkTimes mentioned a report from the Council on Environmental Quality. 

This body, tasked with advising the US president, sounded the alarm about the link between the increasing atmospheric concentration of carbon dioxide and global warming. 

“Efforts should be begun immediately to develop and examine alternative global energy futures,” the report stated, also emphasizing that “international collaboration in assessing the CO2 problem is particularly important.”

Despite this and many other warnings dating back to the 1960s, Reagan distanced himself from the Carter administration’s environmentalist agenda. 

In a symbolic gesture, the new president even removed the solar panels that his predecessor had installed on the White House.

Perhaps unsurprisingly, therefore, intergovernmental cooperation on climate change only took its first concrete steps in the late 1980s. 

And not until the 2015 Paris agreement did the world finally establish a binding framework mobilizing all countries in a determined quest to mitigate global warming.

Reaching such a consensus was not easy. 

How to distribute responsibilities adequately has always been a thorny question in multilateral negotiations on climate action. 

But no obstacle or aspiration – no matter how legitimate – justifies the many years of international discord and neglect regarding this issue.

The threat that already disturbed scientists a half-century ago has steadily grown since then. 

Between 1991 and 2019 alone, the world emitted more CO2 into the atmosphere than between 1751 and 1990. 

Faced with this reality, global climate summits such as this November’s United Nations COP26 gathering in Glasgow are vitally important. 

We simply cannot afford more time-wasting and failures.

Fortunately, there are reasons for hope. 

Many who previously regarded international relations as a struggle to preserve or alter the balance of power now assume that states will have to adjust their priorities in view of twenty-first-century challenges. 

Although climate change will not affect everyone equally, the threat to our ecosystems and to humanity as a whole is so great that shortsighted tactics are out of the question. 

The only way out is for governments to build strategic trust aimed at generating shared benefits.

Moreover, economic trends are increasingly favorable. 

The cost of solar and wind energy is plummeting, helping to drive the green transition even when governments’ environmental policies are out of step. 

In the United States, for example, former President Donald Trump’s deregulatory crusade did not allow him to fulfill his promise of revitalizing coal (the most polluting of fossil fuels), owing to fierce competition from cheaper natural gas and renewables.

But market forces alone will not suffice. 

If we want the energy transition to materialize on time, governments’ must play an essential role. 

The European Union has embedded this philosophy in its European Green Deal, which aims to develop cutting-edge technologies, improve energy efficiency, and compensate the groups most affected by the transition. 

The Chinese government’s industrial policies have led to spectacular growth in renewables, although the country’s economy remains heavily dependent on coal. 

For its part, US President Joe Biden’s administration intends to launch a huge post-pandemic stimulus plan focused on building sustainable infrastructure.

Whereas Trump despised renewables – as if nothing had changed since Reagan’s days – Biden doesn’t want to lose ground in the race to dominate the green technologies of the future. 

This competitive dynamic can generate a virtuous cycle. 

Add in the growing environmental awareness of citizens everywhere, and leaders have greater incentive than ever to be ambitious – as generally reflected in the new emissions-reduction commitments that many countries have already made ahead of COP26.

Still, we will not succeed unless we redouble our efforts. 

For example, the world should also agree on common indicators that allow each country’s climate objectives to be measured and compared easily, as German Chancellor Angela Merkel recently urged.

Closer international cooperation on environmental challenges should spill over into other spheres. 

After all, there is no shortage of global problems that require coordinated action.

The most obvious example is COVID-19 – another risk that caught us unprepared despite repeated warnings, and that many governments have subsequently managed in an excessively self-absorbed way. 

Earlier this month, two expert panels associated with the World Health Organization praised an initiative – sponsored by some 30 world leaders – to establish an international treaty on pandemic prevention and preparedness.

Nor should we overlook the shortcomings of pandemic cooperation in the economic sphere. The G20 has not been up to the task in the current crisis, doing too little to alleviate developing countries’ debt. 

Like the WHO and the World Trade Organization, two other fundamental pillars of global governance, the G20 is in urgent need of reform to shore up its legitimacy and responsiveness.

Regulation of cyberspace also should be a high priority. 

The world’s leading powers have remarkable offensive capabilities in this realm, but their high degree of digital connectivity makes them vulnerable, as the recent cyberattack on the largest US oil pipeline has shown. 

These powers must urgently agree on a set of ground rules that promote security in cyberspace and address the potentially harmful effects of artificial intelligence. 

Some progress is already being made in this regard within the UN.

On climate change and other issues requiring multilateral responses, a critical mass of countries can alter the course of events, for better or worse. 

Although we live in an era of rising geopolitical tension, we must never lose sight of the major challenges that threaten us all and force us to find common ground. 

Anticipating crises, isolating areas of friction, competing peacefully, and cooperating in areas of mutual interest is the recipe for a safer, more prosperous, and sustainable twenty-first century.


Javier Solana, a former EU high representative for foreign affairs and security policy, secretary-general of NATO, and foreign minister of Spain, is President of EsadeGeo – Center for Global Economy and Geopolitics and Distinguished Fellow at the Brookings Institution.