The following is a summary of our recent Big Picture program, which can be accessed on our site here or on iTunes here.
Financial Sense outlines seven large, transformative forces impacting all aspects of the global economy including a list of related interviews for more in-depth coverage.
1. The Retail Ice Age
It’s increasingly clear that retail is undergoing a shift from which many in the space will not be able to recover.
“Year after year, more and more people are shopping online,” said Jim Puplava. “This trend is accelerating. Macy’s announced that they’re going to be closing 100 out of their 730 stores, and 68 stores in 2017.”
Other retailers have recently announced store closures nationwide, as well. Many of these retailers will simply disappear, Puplava stated.
Also, a great deal of debt is coming due, and many retailers are suffering. Many mall owners, for example, are walking away from unprofitable investments.
For an in-depth discussion on this trend, see Howard Davidowitz on Retail Plunge.
2. Automation
Recent reports, such as that issued by the National Bureau of Economic Research, are finding that automation is set to disrupt employment profoundly. Jobs that don’t require higher education, such as those that are manual and unskilled, are going to disappear.
“It’s going to be replaced by robotics and artificial intelligence,” Puplava said.
Many employers are already implementing automated solutions, and we’re seeing the rise of drone deliveries and automated vehicles.
There are fewer manufacturing jobs today than existed in 2007, and yet the economy is producing more stuff today than we did 8 years ago, Puplava stated.
Though manufacturing and assembly line production workers have been the hardest hit by automation, financial services companies are also set for major disruption.
See Blockchain Technology Has the Power to Destroy Financial Monopolies and MIT’s Andrew McAfee on The Second Machine Age.
3. Reverse Migration
In prior generations, it was more common for people to migrate to places like California, Florida, or New York. Now, people are moving to the interior of the country as they follow jobs.
The problem is that in areas of dense population, especially coastal cities and states, the politics tend to be more liberal and the taxes tend to be much higher, Puplava noted.
As a result, people are increasingly moving into states where the costs of living and doing business are much cheaper.
“That’s the next trend we’re seeing in population,” he said. “As more companies move out of these areas with high taxation and regulation … what do people do? They go where the jobs are.”
We discussed this 30-year trend with Meredith Whitney on her excellent book, Fate of the States: The New Geography of American Prosperity, which you can listen to by clicking here.
4. Reshaping Energy and Peak Demand
We’ve heard a lot about peak oil supply, but Puplava believes we’ll see peak demand first.
Traditional oil and emerging market demand have both peaked, he noted. Though he thinks we’ll still see peak oil of all forms eventually, it’s probably decades away, Puplava said.
Horizontal drilling and fracking have changed the game. Saudi Arabia used to be considered the swing producer. The Saudis came to the conclusion that if they cut oil production, other countries would take their market share. So Saudi Arabia chose to continue pumping oil.
“OPEC is no longer in the driver seat, as it once was,” Puplava said. “The swing producer of last resort is now the US and since the US is a market-driven economy, you can see energy ramp up, which what we’re seeing with drilling rigs being put into production.”
For more on this topic, see Why Oil Prices May Stay Low for Another Decade or More
5. Education Technology and the Age of Guilds
College costs are spiraling out of control, Puplava noted.
The average Millennial that gets married brings $70 to $80 thousand dollars of student loan debt to the marriage.
“This is one of the reasons why new household formation and first-time home buying has been sluggish,” he said.
The education paradigm in operation since World War II is shifting. Puplava calls the coming paradigm the “Age of Guilds.”
“We’re going to see the rise of junior colleges that partner with major companies and come up with a 1- or 2-year degree program that gives students the certification and skills they need to work in a modern factory,” he said.
6. Longevity and Health
Longevity has been increasing by 2 years every decade, Puplava stated. This trend is set to continue, and retirement planning will change with it.
“These health devices that we see right now are nothing compared to what we’re going to see in the next 10 years,” he said.
We’re going to see more centenarians, Puplava added. Social Security is going to have to be changed to remain solvent. Because people are living longer, the age of retirement is going to be pushed back.
For related interviews/podcasts, see Dr. Paul Robbins on Senescence and the Science of Aging, Andrew Scott on The 100-Year Life: Living and Working in an Age of Longevity, and Synthetic Biology – A Revolution in the Making.
7. Entering Into Orwell’s World?
Anyone living in a democratic Western country should be concerned with the rise of digital surveillance and the invasiveness of modern technology, Puplava argued.
“We’re seeing the rise of fake news, where rumors become headlines,” he said. “Political correctness is a form of mind control.”
This all hearkens to George Orwell’s novel, 1984, where a fascist state controls everything, including the media.
“A lot of the news today is biased in the way it is presented, and also by what is not shown,” Puplava said.
This is a trend we can hopefully arrest, Puplava added, but it is nonetheless dangerous.
For related book interview, see Data and Goliath: The Hidden Battles to Capture Your Data and Control Your World with security expert Bruce Schneier.
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