For the first time in our nation’s history, the majority of American households are run by single-persons, according to the U.S. Census Bureau. From 70.6% in 1970, the percent of married couples has crashed through the 50% level early in the Obama Administration and hit 48.9% in 2012.
According to a new report by economist Edward Yardeni, this dominant demographic of “singleton” means the U.S. economy is in for big changes driven by fewer children, declining home ownership, and new and potentially greater economic risks.
Dr. Edward Yardeni operates a highly respected Wall Street research firm and publishes the influential Dr. Ed’s Blog that focuses on identifying long term investment opportunities that are driving the changing structure of nations’ economies. While at the investment banking firm of Deutsche Morgan Grenfell in July of 1997, Yardeni developed the “Fed Model” that is used by the Federal Reserve to understand the relationship between the yield on long-term Treasury bonds and stock market returns.
Yardeni reveals that the number of married couples without children has remained remarkably steady at about 29% of households for over four decades. But the percentage of married couples with children has been more than cut in half with the rate plummeting from 40.3% in 1970 to 24.1% in 2000 and just 19.6% today.
It is well known that because almost 50% of marriages end in divorce, the number of “other family households”, which means one parent living with children, has increased by two thirds from 10.6% in 1970 to 16% in 2000 and 17.8% today.
But the biggest demographic change is the number of single males and females living alone. Given that women tend to outlive men, the number of single females living alone in 1970 was already 11.5%. The rate of single female households grew by a third over the next 42 years, hitting 14.8% in 2000, and 15.2% today. But with single males living at only 5.6% in 1970, the rate more than tripled in 42 years, hitting 16% in 2000 and up to 17.8% today.
Yardeni acknowledges the cheerleaders for “singleton” that trumpet the benefits of greater labor force flexibility in the U.S. economy. Since single people have fewer commitments with children and home ownership, they supposedly can be “more mobile when it comes to their career, able to move or change jobs as the demand for labor shifts.”
But he points out that “without those tethers” they also face more downside risks:
“With a single source of income (and health insurance), single households are more sensitive to job loss, injury, or illness. Their ability to cut spending, while good for the personal balance sheet, could make the economy more sensitive on the whole. And fewer children mean both fewer future taxpayers able to fund entitlement spending and potentially less of a safety net for singles as they age.”
Looking at an increasingly competitive global economy, Yardeni worries that the trend to more “singleton” in the U.S. will increase the U.S. economy’s risk profile. A more flexible and responsive labor force might enable the American economy to grow faster, but less stability and fewer future taxpayers to pay for promised retiree benefits will more than undermine the benefits of “singleton.”
Chriss Street suggests that if you are interested in economic trends please click on: REAL HOUSEHOLD INCOMES FALL 5.9% UNDER OBAMA