The last time this happened, soldiers were returning from World War II.
The resulting baby boom between 1946 and 1964 created the largest generational group in North American history, which has had and continues to have a disproportionate impact on society and the economy.
Forget the baby boomers, there could be a new baby boom in town.
BofA Global Research estimates that millennials, born between 1981 and 1994 and now the largest age group in the United States and Canada, will lead to a baby boom starting in 2021.
Rising birth rates, increased sales of pregnancy tests, and Bank of America’s own survey of consumer spending support the claim of a Bank of America analyst group led by Robert Ohmes.
After declining in 2020, live births rose 3.3% in June, the strongest growth since 2013.
Sales of pregnancy tests have increased 13% from last year, according to data from Nielsen and BofA research. This compares to an average 2% year-over-year increase from 2016 to 2019.
Bank of America’s own survey of consumer spending showed that more people are expecting or trying to have babies in the next year, hitting an all-time high for this survey. More than 22% of those polled said they plan to buy a house next year, while 11% are expecting or trying to have a baby.
Data from the Pew Research Center confirms this. In 2019, Millennials overtook baby boomers as the largest generation of adults living in the United States, with 72.1 million. There were 71.6 million baby boomers and 65.2 million Gen Xers (aged 39 to 54).
The millennial generation is expected to grow as more immigrant youth arrive in North America, while the number of baby boomers declines.
With immigration adding more numbers to the Millennials Group than any other, Millennials are expected to peak in 2033 at 74.9 million.
A baby boom could change society and the economy in the years to come in several ways, but for investment purposes, Bank of America identifies two sectors that could have a short-term impact: housing and retail. detail.
“More people having babies and buying homes is good news for home builders and construction products,” the research said, noting that the tailwind of millennial homebuyers is still in its infancy. .
Canadian economist Rishi Sondhi of TD Economics also this week cited a large portion of the population moving into the home buying years as driving home sales in Canada.
Affordability is a concern (even more important in Canada), but BofA believes that wages and rents rise rapidly and borrowing costs remain low, homeownership becomes more attractive. Their cost analysis indicates that monthly mortgage payments at current rates are lower than median rents in 12 of the 20 largest residential construction markets.
Changing lifestyles, such as remote working and flexible hours, will further stimulate demand at home.
The other big winners will be grocers, big box stores like Walmart and Target, and warehouse clubs like Costco, as millennials buy homes and create households, the research shows.