For the first time since the onset of the Great Recession, the United States has topped the World Economic Forum's Global Competitiveness rankings. The US scored 85.6 of a possible 100, followed by Singapore (83.5), Germany (82.8), Switzerland (82.6), Japan (82.5), Netherlands (82.4), Hong Kong SAR (82.3), the United Kingdom (82.0), Sweden (81.7) and Denmark (80.6). The World Economic Forum is a nonprofit foundation formed in 1971 to encourage public-private cooperation. It is a highly respected organization which is independent and impartial (I have worked with the Forum on several occasions), and a rigorous process is used to develop the annual rankings (which have been produced for the past four decades).
One of the most challenging aspects of economics is trying to predict, and perhaps modify, future performance. It's particularly difficult when looking out over several decades, but having some idea of future patterns is essential to planning for individuals, businesses, and government entities. This year, two Americans have been awarded the Nobel Prize in Economics (or, more formally, "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2018") for their insights into how we should think about change in looking well beyond the horizon.
The US, Mexico, and Canada finally hammered out a trade deal, which is excellent news for the economies of all three nations. The new agreement, which still must be finalized and agreed upon by Congress, is known as the US-Mexico-Canada Agreement (USMCA). It replaces the North American Free Trade Agreement (NAFTA) which had been in place for about 25 years.
5G is coming, and it has the potential to change everything. The first wireless technologies allowed for basic communication, and 4G paved the way for the transmission of larger amounts of data, opening the door to everything from streaming video to improved navigation systems to basically constant internet access. With 5G, we are likely to see an even more dramatic shift, with much more capacity and quality allowing for communication across a new spectrum. Machines of all kinds, from cars to electronic devices and beyond, will be able to exchange information seamlessly. The implications are difficult to overstate.
It's been 10 years since Lehman Brothers filed for bankruptcy, intensifying the financial crisis and deepening the Great Recession. The collapse of one of the world's largest investment banks contributed to the loss of nearly $10 trillion in wealth in equity markets around the globe. The United States economy was already contracting, and over the next six months about 4.5 million jobs were lost.
The newest Army Command is coming to Austin. Army Futures Command is part of a historic reorganization of the Army and is the first new 4-star Command in 45 years. It's a notable departure for the Army, being located in an urban area (rather than a military base) and having an express mission of interacting with the surrounding businesses and academia. The new facility will employ about 500 people once fully operational, including 400 civilians.
A federal judge in Houston has ruled that the State of Texas can't end Deferred Action for Childhood Arrivals (DACA), which is good news not only for Texans directly and indirectly affected, but also for the economy. (I was directly involved in the matter and gave testimony regarding the economic effects of DACA.)
The current bull market in US stocks is now the longest on record (according to most people). Unless the economy derails (which is unlikely for the foreseeable future), the bull has room to run, even after nearly 3,500 days on the move.
Across the nation, young people (and many who are not so young) are headed back to school. For those attending higher education institutions, a new semester also means a tuition bill. The cost of college has risen substantially, as have living expenses for students. There are also opportunity costs, which are the potential earnings students give up by choosing school rather than work. Given the high and rising costs, I am often asked if a college education is still worth the investment. The answer is a resounding yes, though there should clearly be a thoughtful decision process.
The percentage of Americans who are working continues to fall. Labor force participation peaked in 1997-98, when about 67% of people aged 16 through 64 were employed or seeking work (according to the Bureau of Labor Statistics (BLS)). Over the past 20 years, it has trended generally downward and now stands at less than 63%, a significant drop from even 10 years ago, when the rate remained about 66%. A sharp decline began in 2009, and subsequent improvement in the job market hasn't altered the pattern. With a slow natural rate of population growth and potential limits on immigration, the implications for the economy are profound.