The Global Economy: Trends and Predictions Turning Today Into Tomorrow
Linda NazarethEconomist, Senior Fellow for Economics and Population ChangeMacdonald-Laurier InstituteToronto, Ontario
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The Global Economy
• The Economic Transformation• The Technological Transformation• The Workplace Transformation• The Social Transformation
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The Economic Transformation
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The U.S. Is Heading for ‘Normal’
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Job Growth is Finally ‘Back’
‐1000
‐800
‐600
‐400
‐200
0
200
400
600
2007 2009 2011 2013 2015
Change in U.S. Non‐Farm Payrolls (000)
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The Unemployment Rate is at a 7 Year Low
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
2007 2009‐01‐01 2011 2013 2015
U.S. Unemployment Rate (%)
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Americans are Spending Their ’Savings’
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And Interest Rates are Probably Heading for ‘Normal’ Too
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Inequality is Growing
0
10
20
30
40
50
60
1960 1970 1980 1990 2000 2010
Share of Total Incomes, U.S.
Top 10% Top 5% Top 1%
Source: United Nations database
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Long Term Unemployment is an Issue
0
5
10
15
20
25
30
35
40
45
50
1/1/90 1/1/93 1/1/96 1/1/99 1/1/02 1/1/05 1/1/08 1/1/11 1/1/14
Percent of Total Unemployed Out of Work 27+ Weeks
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Especially for Pockets of Workers
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Unemployment by Education
0 1 2 3 4 5 6 7 8 9
Doctoral Degree
Professional
Masters
Bachelor's degree
Associate's degree
Some college, no degree
High school diploma
Less than a high school diploma
All workers
U.S. Unemployment Rate by Education Level, 2015
Source: Bureau of Labor Statistics. Data is for Population Aged over 25
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And There are Lots of Disruptors Out There . . .
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Commodities Tell One Story
0.00
50.00
100.00
150.00
200.00
250.00
300.00
2005M1 2010M1 2015M1
AllMetalsEnergyFood
Commodity Price Indices (2005=100)
Source: IMF
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A ‘Hard‐Landing’ for China Would be a Disaster
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The U.S. Election is a Wildcard
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As Is Brexit
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The ‘demographic window’ for business is closed or closing in a lot of places
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Including North America Beginning End
World 2005 2045
Africa 2045 2080
Asia 2005 2040
India 2010 2050
China 1990 2025
Latin AmericaAus/NZ
20051970
20402010
U.S./Canada 1970 2015
E. Europe Pre‐1950 2015
W. Europe Pre‐1950 1990
Source: United Nations data
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We are in the Midst of a World Power Shift . . .
21
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How the Rankings Will Change
2005 2015 2025United States United States United States
Japan China ChinaChina Japan JapanGermany Germany IndiaFrance France GermanyUnited Kingdom United Kingdom United KingdomItaly India FranceBrazil Brazil BrazilCanada Italy ItalySpain Canada CanadaRussia Russia RussiaIndia Spain SpainAustralia Australia AustraliaMexico South Korea South KoreaSouth Korea Mexico Mexico
Rank by Size of Economy in GDP Terms ($2010)
Source: U.S. Department of Agriculture
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The one who has the gold makes the rules
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2010 2020
Other emergingChinaOther developedJapanWestern EuropeU.S.
Source: McKinsey Global Institute
Distribution of Financial Assets
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By 2030, Asia will have surpased North Americaand Europe combined in terms of global power
New Players are Gaining Ground
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A New Middle Class is Emerging
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According to the McKinsey Institute, the developing middle class in emerging economies is comparable to the U.S. middle class in 1925. In that case, the market leaders that year remained the number-one or number two player for the rest of the century.
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In North America, the Focus is on the Short Term
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It is Not Serving Us Well
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The Big Picture? Huge Changes Ahead
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The Technological Transformation
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The Luddites Were Wrong
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This is the Fourth Industrial Revolution
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Technology Has Not Destroyed Jobs
Source: Deloitte
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Or Has It?
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Manufacturing Does Not Need That Many Workers Anymore
0
5
10
15
20
25
30
1970 2015
Percentage of Total U.S. Workers Employed in the Manufacturing Sector
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Or at FoxConn, Any At All
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’Polanyi’s Paradox’ may save (some) jobs
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Most Vulnerable: Fast Food Jobs
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Or Maybe We are Talking About Everyone…
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The Workforce Transformation
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Work is Not a Place
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We are Headed for ‘Haves and Have Nots’ in the Workforce
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Talent Wars Will be for the Select Few
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The Side Hustle Becomes a Thing
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The Gig Economy Goes Corporate
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There Will be Different Models of It:
• On Retainer Workers
• Part‐Time Workers
• Contract but Full Time
• Contract Temp Workers
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The concept of ‘benefits’ will be in flux
1-47
Lots of Lone Rangers Will Need Help Regarding Benefits
1-48
Now is the Time for ‘Portable’ Benefits
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The Social Transformation
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How Lenders Lend Will Have to Be Re‐Thought
1-51
Borrowers and Lenders are Re‐Thinking Home Ownership
1-52
Women are Gaining Ground – And There Could be Implications for Benefits
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The Trade‐Offs Between Time and Money Will Look Different
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Income Distribution in Cities Will be an Issue
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We Need to Talk about a Universal Basic Income
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We are Talking About a Brave New World
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You are ahead of the curve
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