Economic predictions are tough. The events of the last couple of years made that abundantly clear—a pandemic, breaks in the supply chain, and now an unexpected war that’s transforming the world economy.
They still have value, though. Businesses need to have some idea of what’s to come in order to continue to make money and be successful, and we all need accurate trend predictions, too, to plan our lives effectively.
Given all that, it’s worth taking a shot at some speculative economic predictions about some important major trends. We’ll go with the numbers 5 and 10 just to keep things well-rounded, i.e., what are the 5 major economic trends that will dominate the next 10 years?
1. The Global Economy Shift
Sometimes a solid prediction starts at the top, so for this one, we’ll pick out China and the US. The two superpowers are competing at almost every level—economically, to establish technological superiority, and even military competition to establish who has the best arsenal of bristling weapons.
Many have compared it to the Cold War, and indeed, many experts are certain there will be dangerous military confrontations and skirmishes.
That will lead to more economic competition, with the result that there will be two global economies—east and west.
No one knows where this is going, really. All we know is that it’s different, and countries are trying to anticipate what comes next by forming new alliances and partnerships.
2. The Wealth Question
Income inequality has been a growing issue for years now, if not decades, and it’s only going to become more prominent in the coming decade.
The pandemic made this abundantly clear, as the US government was forced to bail out individuals in need while the Federal Reserve loosened borrowing restrictions to help prop up a struggling economy.
The schisms continue to grow, and the new factions are becoming ever clearer. They include rich vs poor, young against old, and the result is the creation of what’s being called a “disorder cycle.”
This is spawning new kinds of confrontations—outrage about crime, protests of all sorts, the January attack on the US Capitol, and standoffs between medical public health advocates and anti-vaxxers.
It’s all about the ongoing redistribution of wealth, and based on what we’re saying now it’s going to get worse before it gets better. The phenomenon is fascinating, and it’s popping up and taking a toll in all kinds of unexpected ways.
3. Business Cycles: Which End is Up?
For the last half-dozen decades or so, business cycles have been fairly well defined. Banks and governments try to stimulate struggling economies with interest rates that improve borrowing power, then tight those rates up when inflation rears its ugly head.
Right now we seem to be at the beginning of an inflationary cycle. That means more money will have to be printed, which will drive down the value of a dollar. How long this part of the cycle lasts will have a lasting impact on the world economy, divided or not, for the next decade.
4. The AI Question
AI is the new force in the global economy. In the next ten years, it’s expected to drive as much as $13 trillion worth of economic output, and this will drive up the GDP at an annual rate of just over 1 percent.
This might seem like a small number, but in reality, it’s a huge shift. AI is starting to play a prominent role in virtually every industry—the automotive sector, energy utilization, the medical sector when it comes to advances in disease detection, and advanced diagnostics based on leaps forward in genome research.
Once again, the US and China are at the center of the battle to win the AI race, and the winner will have a clear economic advantage for the next ten years, if not longer.
5. New Demographics
Demographic shifts are often trendsetters in every decade, but the one that’s happening now has sparked some especially sharp divisions between young and old.
The affluent conservatives are winning many of the old vs young battles now, but this will inevitably change. In the next 10-15 years, the younger portion of the electorate will continue to grow in numbers and power, and at the very least that will probably mean higher social spending to try and balance out the wealth inequities that have become so blatantly obvious in the last few years.