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Top 5 Economic Trends

What Is the Future of the U.S. Economy?


U.S. future economic trends
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Updated June 22, 2013
These are the top five trends that are most likely to affect the U.S. economy in the future. Follow these trends, and you will be most able to protect your financial future - your job, your home and your retirement savings.

1. Uncertainty Raises Business Costs - Increased economic uncertainty, both during and following the 2008 financial crisis, has forced businesses to change their planning process to cope. An October 2012 poll of more than 140 financial executives showed they shifted the whole way they do business. More than 40% still face high or very high uncertainty. They've been buffeted by an onslaught of unexpected changes to their business, such as bankruptcies of key customers or suppliers, loss of bank loans, and decreasing demand. Policies in Washington have created more uncertainty with the U.S. debt crisis and the fiscal cliff in 2012.

Despite increasing optimism about the next two years, many business leaders are still concerned about ongoing uncertainty. As a result, they are not as confident of their ability to predict the future. To cope, they've had to shift the whole way they do operational planning. For example, nearly half reforecast their entire business more than once a quarter.

This is expensive, and makes long-term expansion difficult. Unfortunately, it's now a required part of being competitive in an ever-changing global environment.

2. Companies Stick with Freelance, Temporary and Part-time Workers - Businesses are less likely to hire full-time workers for three reasons: 1) To keep overhead low, 2) To remain flexible in an uncertain environment and 3) To keep from paying higher health care benefits.

To thrive, workers must create multiple streams of income, and remain flexible themselves. The best ways to do this? Try to find a way to make money from a hobby. Be realistic about your attractiveness in the job market, whether due to your age or your work history. Get new skills for a part-time job that could turn into something more. Be open-minded about what you can do to earn more money. Stay focused on turning your skills, assets and time into more cash. Be aware of economic trends, and take advantage of them. For more, see How to Thrive in a Freelance Economy.

3. Baby Boomers Won't Retire - A recent Prudential survey showed over half of those aged 45-75 are being forced to delay retirement because of the recession. Even those who can afford to retire will probably keep working in some capacity. Like the Great Depression, the Great Recession has left emotional scars, and a new willingness among many Baby Boomers to keep costs low and incomes high. That means the old idea of playing golf and truly retiring gives way to many forms of semi-retirement.

Unfortunately, this also means they won't get out of the way for the younger generation. These new workers will adapt by giving up the old "career track" and finding ways to earn a living that are rewarding and meaningful to them. They will also take advantage of innovation in technology to create new jobs that don't exist today. For more, see Retirement.

4. America Gradually Declines in Global Economic Power - Before the recession, the G-7, the leaders of the world's developed economies, set economic policy. They were led by the U.S. In 2009, this group was forever replaced by the G-20, which includes recession-resistant countries such as Brazil, China, and India. These countries were still robust because their banks were more regulated. With stronger economies, these countries demand more global economic power -- and they will get it. This is one more reason why the standard of living in the U.S. will gradually decline. However, as it increases in the poorer areas of the world, U.S. businesses have more export opportunities. This will keep the standard of living at an acceptable level. Instead of being the world's only superpower, the U.S. will be a leader among many.

5. The U.S. Will Have Another Major Crisis, But Avoid an Economic Collapse - It seems the U.S. has an economic crisis every decade or so. That's because of the phases of the business cycle -- for every boom there is a resultant bust.

However, the 2008 financial crisis was so devastating that the economy has not yet recovered fully. Politicians have compounded the problem with uncertainty. Combine this with the speed of financial transactions, and the result is more economic volatility. Gas and oil prices rise and fall, depending on investors' moods. This translates to higher food prices.

Gold prices hit an all-time high in . Interest rates have been at 200-year lows. These extremes potentially indicate new asset bubbles. That's the precursor to another economic crisis, possibly in 2018.

However, a collapse will be avoided. There are too many protections in place to allow that to happen. For more, see U.S. Economic Collapse. Article updated February 21, 2013

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