Millennial baby boom is on the way: Sales of pregnancy tests rose 13% in the last year
Retailers were given good news on Tuesday by a Bank of America analyst who predicted that a millennial baby boom could be on the way – leading to a boost in sales for stores.
Millennials – those aged 25 to 40 – now make up the largest generation in the United States, having overtaken Baby Boomers.
About 72.1 million people are classified as millennials, also known as Gen Y, according to Pew research.
Robert Ohmes, the BofA analyst, reported on Tuesday that birth rates are up, more pregnancy tests are being sold, and more couples say they are trying to have a baby.
Sales of pregnancy tests have grown by an average of 13 percent year-on-year since June 2020, according to data from Nielsen and research by Bank of America.
Sales of pregnancy tests have risen 13 per cent, year on year, since June 2020 according to a new report out on Tuesday
Ohmes predicted that a Millennial baby boom would bring good news for retailers
Between 2016 and 2019, the sales of pregnancy tests grew by an average of two percent.
The data suggests that the surge in sales could reverse the pandemic-era decline in births.
Live births increased 3.3 percent in June 2021 – the highest level of growth seen since 2013.
Ohmes said that would likely trigger a boom in sales for big box retailers such as Target, Walmart and Costco as new parents shop for diapers, cribs and strollers.
Ohmes and his team spoke to 1,000 people in October, and 11.3 percent of respondents said they or their partner are expecting or trying to have a baby over the next 12 month period.
He predicted that Albertsons, Kroger, Dollar General and BJ’s Wholesale Club would benefit from the new baby boom.
New parents are expected to usher in good sales figures for retailers such as grocers and department stores
The prediction of a surge in spending came as household debt hit a record high.
In a report on Tuesday, the Federal Reserve said that total household debt increased by $286 billion to $15.24 trillion in the third quarter of 2021, after leveling off for much of the pandemic.
Mortgage balances, which are the largest component of household debt, rose by $230 billion and stood at $10.67 trillion at the end of September, reflecting fast-rising home prices.
Total non-housing balances increased by $61 billion, including a $28 billion jump in auto loan balances as supply chain issues spurred huge increases in the prices of both new and used vehicles.
Total US household debt increased by $286 billion to $15.24 trillion in the third quarter of 2021, after leveling off for much of the pandemic
Although credit card balances increased by $17 billion, they still remain $123 billion lower than they had been at the end of 2019.
Student loan balances grew by $14 billion, coinciding with the academic borrowing year.
During the pandemic, many households paid down debt and increased their savings, thanks to government stimulus checks and reductions in discretionary spending.
However, the trend has now reversed as consumers rush to spend their stockpiled wealth, with private savings now back roughly in line with pre-pandemic trends.
‘As pandemic relief efforts wind down, we are beginning to see the reversal of some of the credit card balance trends seen during the pandemic, namely reduced consumption and the paying down of balances,’ said Donghoon Lee, research officer at the New York Fed.
‘At the same time, as pandemic restrictions are lifted and consumption normalizes, credit card usage and balances are resuming their pre-pandemic trends, although from lower levels.’
New credit card accounts have been rising rapidly as the economy recovers
In a piece of good news, delinquency rates across all debt products have remained low and continued to decline since the beginning of the pandemic, which the Fed attributes to lender concessions and legal relief for debtors.
The share of mortgages that transitioned to delinquency increased slightly to 0.41 per cent from the second quarter’s record low, as mortgage forbearance protections ended.
As of late September, 2.7 per cent of outstanding debt was in some stage of delinquency, a 2.0 percentage point decrease from the fourth quarter of 2019, just before the COVID-19 pandemic hit the United States.
Inflation has played a major role in boosting household debt, as rising home and auto prices force consumers to take out bigger mortgages and loans for purchases.
