Over the last six months here on the Financial Sense Newshour we have been dealing with major changes which we see coming in the next decade. We've had a lot of guests on the premium channel who are articulating various aspects of these so-called “megatrends”; and very much like a paradigm shift, oftentimes when there is a major change we actually don't recognize it for what it is until it's already been well-established.
So, what are these major trends that will reshape the U.S. over the next decade? By drawing from an extensive list of interviews from authors, economists, and guest experts, Jim Puplava, host of Financial Sense Newshour, tackles this question in his most recent Big Picture broadcast by compiling a list of the following seven “megatrends,” many of which are concentrated in the U.S.:
1) Energy renaissance
2) Manufacturing renaissance
3) Revolution in education
4) Transformation of retail
5) Development of the central corridor - atrophy of other parts of the country
6) Dominance of the U.S. financial markets
7) Accelerating advancements in technology
Here, we present a few brief excerpts of the first three.
U.S. Energy Renaissance
"The supply shock created by a surge in North American oil production will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15."
-International Energy Agency
This has probably been the most surprising and sudden of all developments. Ten years ago, a topic that was often discussed on our show was peak (cheap) oil—the reality that most of the cheap and easily accessible sources of oil have been depleted around the globe and will need to be slowly replaced over time. Now, with technological breakthroughs in horizontal drilling and fracking, previously inaccessible oil and gas reservoirs scattered throughout the U.S. (and other parts of the world) have dramatically reversed the multi-decade decline in U.S. oil production. As quoted above, the International Energy Agency believes, as many have also cited, that this will transform the globe and realign trade in powerful ways, similar to the impact a rising China had on the world over the last 15 years.
Source: World Bank
Manufacturing Renaissance
When you compare very low energy prices in the U.S. versus other parts of the world, it makes sense that numerous companies are now choosing to relocate to the U.S. Although energy is a major factor, it isn’t the only one. Inflation and wage increases across the emerging world, stable labor costs in the U.S. along with advancements in robotics and other manufacturing techniques have narrowed the cost differential between the U.S. and other markets considerably. “Made in America” is making a comeback, and it will probably remain this way for some time.
Here’s a list of some of the companies that Charles Schwab’s Senior Vice President, Liz Ann Sonders, compiled that have either moved or are in the process of moving back to the U.S.:
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Revolution in Education
As we all know, the cost of higher education is continuing to skyrocket and, in many cases, becoming increasingly irrelevant and impractical for the day-to-day needs of businesses. First it was a college degree, then it became a master’s degree, then a PhD, and now, given how competitive the job market has become, post-doc work or other highly specialized degrees have now become a commonplace requirement that people simply cannot afford anymore.
What’s changing all of this?
Major companies are starting to work together with local colleges in developing 2-year transitional programs that provide the specific skills and specialties required to meet company needs. Wharton, MIT, and a number of other major colleges are transitioning to online courses that are either free or a fraction of the cost. Together, this is leading to a major re-think of how we bridge the large and growing unemployment gap that now exists for young adults.
If there was a way to gain specific skill-sets at a fraction of the cost, which would also help increase one’s chances of landing a job in a nearby company, without having to pay off student debt loans for years or decades to come, how many would choose this option instead? Given the plight of our youth today, it seems pretty obvious, which is why major changes are being made in this direction.
In the rest of Jim Puplava’s Big Picture broadcast on the Financial Sense Newshour, he tackles the last four of his seven “megatrends” that are transforming the U.S. and parts of the world. They are: the transformation in retail, the development of the “central corridor” and corresponding atrophy of other parts of the country, the continued dominance of the U.S. financial markets (and why), and accelerating advancements in technology.
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