Births among teens are down by 46% since 2007.
According to the January – September "U.S. Toys Supercategory Performance" report from NPD, things are looking good for most toy industry categories. Of particular note to me was the projected increase of 3% for what NPD calls the "Infant/Toddler/Preschool" sector.
I like to keep a close eye on the this category (which I will call Preschool for short) because it is the canary in the coal mine for toy industry. If Preschool is down it will be the first signs of a decline wave that will push through all age groups until it matures into the tween / teen years. In other words, whether you work in the Preschool category or not, its fortunes have an impact on yours.
As I have written before, the category has struggled over the last few years due to the lingering impact from the Great Recession. Simply put, young people had until recently been graduating from college with little in the way of job prospects and with a lot in the way of debt. The result was a drop off in family formation and subsequently births.
I wanted to dig a little deeper and see exactly who was and was not having babies. So, I checked out the National Vital Statistics Report (Volume 65, Number 3): The preliminary number of births in United States declined from 2014 to 2015 by 1%. That was after an increase in 2014 over 2013, the first to occur since 2007.
That could mean that the current increase in toy sales will be fleeting but I doubt it. When you dig into the numbers you see that the biggest declines are occurring where you want them to: Teenagers aged 15-19 (down 8%). In fact, teen births are down a whopping 46% since 2007.
That's good news and so is the fact that the only age groups to show an increase was women ages 40 – 44 (up 4%) and women 45-49 (flat). These two cohorts are the ones with the highest family incomes. They have the disposable income to purchase not just toys but toys with higher price points.
All in all, I would project that the decline in total births will continue to be offset for the toy industry by an increase in the purchasing capacity of those who are having children, i.e. older women. Expect the category to stay steady or increase slightly as long as that balance continues.