Echo of the Echo of The Baby Boom

"When I was a kid my parents moved a lot, but I always found them."

Rodney Dangerfield

I believe the US is at the cusp of a sustained rate of higher births that should last for the rest of the decade.  Essentially, this "echo of the echo of the baby boom" is being driven by two distinct trends – 1) GenXers are now entering their prime child bearing years and 2) immigration.   

The following chart shows the US birth rate since 1945.  GenXers, which were essentially the "echo of the baby boom" are now entering their prime child bearing years.  They are creating the "echo of the echo of the baby boom". 

Source: National Centers for Health Statistics

I draw the conclusion from the fact that GenXers are now entering their prime child bearing age between 20 to 30 years old.

Source: National Centers for Health Statistics

In addition, the high immigration rate, especially by Hispanics, is driving the rising rate of US births.  The number of births to Hispanic parents has almost doubled in the past decade and now make up the second largest proportion of US births. 

Source: National Centers for Health Statistics

The overall higher number of births should create several invest-able trends worth examining.  Several that I am focusing on:

1)  Continued strong spending on child care, child services and child equipment.  I think this is the easiest trend to invest in.  Obivous choices include children’s clothing companies such as Carters, Children’s Place and Gymboree, toy companies such as Hasbro and Mattel, services companies such as Pediatric Services of America and Bright Horizons Family Solutions, and drug companies such as Abbott Labs and Johnson and Johnson. 

2)  The number of single mothers has also increased rapidly in the past decade. 

That leads to the need for services child support collection services.  Companies in this industry include Tier Technologies and Affiliated Computer Services. 

3)  The increased number of school aged children will place a tremendous burden on the already weak public school system.  Increased use of technology and the Internet will be one of the keys in overcoming some of these strains.  Companies in this industry include PLATO Learning, Pearson plc, McGraw-Hill, and Blackboard. 

Some of the companies I’ve mentioned are too small and some are too big, some too expensive and some not very high quality.  I will attempt to pick appart some of the companies that can benefit from the "echo of the echo" trends and focus on them in future posts.