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Shortly before Christmas, the US Census Bureau released data highlighting a worrisome trend: The population grew at a subdued 0.7%, the lowest rate of growth since the Great Depression years of 1936 and 1937. Declines in the birth rate and the slowing pace of immigration are to blame.

Ask an economist why this matters, and you’ll get contradictory answers, as the relationship between population growth and economic expansion is a vexed subject. But if you sift through historical data, it’s hard to deny that the demographic slowdown, should it continue, likely puts a damper on future economic growth.

Declines in the rate of population growth are nothing new. It has been in decline throughout the West for several decades. In some countries in Europe, the rate of growth is below replacement levels. The US has also been on a downward trajectory since the 1990s, though the pace has been less steep. The latest figures for the rate of population growth compare with 1.4% in 1994 and more than 2% at the height of the baby boom.

If you take the really long view, these declines are nothing more than a continuation—with some episodic, if anomalous, baby booms—of patterns that are two centuries old and counting. Birthrates dropped dramatically over the course of the Industrial Revolution in Europe and the US. This was particularly true for the middle classes. Unlike farm families, middle-class families living in cities no longer needed as many children, and industrial society encouraged them to invest more resources—money, time, calories, education—in fewer offspring.

But these declines in the birth rate weren’t bad news in and of themselves; if anything, they seem to have been quite positive, going hand in hand with dramatic economic growth. But is there a point when declines in the rate of population growth intensify to the point where they can start to drag down the economy?

Some intriguing evidence on this count comes from the historical record, specifically the period immediately after World War I, when fertility declines accelerated throughout the West. This subject has attracted very little study, save for a handful of little-known scholarly articles. One, by Canadian economist Clarence Barber, traced the relationship between declines in the rate of population growth and the eventual onset of the Great Depression. He observed that during the 1920s, in the years preceding the 1929 crash, the rate of population growth had fallen by approximately a third in western and northern Europe and by half in the US.

In all likelihood, this decline was owed to the growing secularization of society, and in particular, the growing opportunities for women outside traditional gender roles—not to the collective trauma of World War I. These new mores went hand in hand with sharp declines in the formation of new households, as younger people put off marriage and childbearing. This led to a dramatic decline in residential construction starting around 1926.

In theory, immigration might have picked up the slack. While Barber didn’t address this in his study, it’s worth noting that Congress put drastic curbs on inflows of people in 1924. That year, 706,000 immigrants legally entered the country. The number dropped precipitously the following year, and by 1933, the number had fallen to 23,000.

How these demographic declines set the stage for the Great Depression is hard to know, but Barber believed that the decline in birth rates among native-born Americans set the stage for declines in aggregate demand. And even if demographic declines weren’t solely to blame, they intensified after the Great Depression, contributing to the catastrophe.

Indeed, by the 1930s, the staggering decline in birth rates throughout the West contributed to growing pessimism about the likelihood of a full recovery.

None other than John Maynard Keynes warned of this peril in a talk delivered in 1937 titled “Some Economic Consequences Of A Declining Population". He acknowledged that population declines might be mediated, but raised grave concerns about the risks posed by the demographic trends of this day. He closed his talk with a nod to Thomas Malthus and the “devil" of overpopulation. “The chaining up of the one devil may, if we are careless, only serve to loose another still fiercer and more intractable."

His concerns proved unfounded—not because the developed world found a way to negotiate declining fertility rates, but because the years after World War II saw an unexpected baby boom in the US, and to a lesser extent, most of western Europe. That population boom and the consumer demand it begot, is credited with averting a return to the gloomy days of the 1930s.

Which brings us to the present. The recent data on population growth marks an ominous return to a trough last seen during the Great Depression. Moreover, data released by the real-estate firm Trulia indicates that the number of young people living with their parents (or siblings) recently hit levels not seen since 1940.

That statistic suggests that a baby boom isn’t likely, never mind a boom in consumption fuelled by the formation of new households.

But at least the US still has immigration, right? Perhaps not: President-elect Donald Trump has been vocal about his opposition to illegal immigration, but since the election, he has started sending signals that he intends to crack down on legal immigration too. If that happens, only a home-made baby boom will save us from further decline in the Trump years.

“Make America mate again"? Stranger things have happened. Bloomberg

Stephen Mihm is an associate professor of history at the University of Georgia and a contributor to Bloomberg View.

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