In late 2019, the world economy teetered over an economic precipice of uncertainty. Between political sparring and ecological disasters, world markets seemed to feel every bump on the road. The volatility in world markets and political uncertainty, combined with ecological crises, all provided textbook examples of how the effects of contemporary issues such as peace and order can impact markets.
As much as economists enjoy predicting market shifts, the challenges facing the economy today herald a brave new world with dramatic terrain where some of the following issues will require great leadership and imagination.
Contemporary issues in economics vary from nation to nation, but every country wrestles to varying degrees with climate change, political scenarios, technology and even the human element behind both labor and consumer spending.
Many of these are not stand-alone issues but are complex threads in the fabric of the world’s economy.
Outsourcing: As offshore and outsourced businesses continue growing, America’s economic landscape will continue its shift as once-rewarding factory jobs go where wages are lower and regulations are simpler. New sources of income for Americans will need conjuring.
Automation: As technology grows ever-smarter, automation will continue to do fast work with precision — even taking food prep and other jobs out of rotation. With each new task or job rendered obsolete, the income potential vanishes. Strong economies need jobs, but they also need companies with low overhead, making this quandary vexing for economists today.
Political Turmoil: Governing is never about sailing smooth seas, but the stormiest seas topple the strongest of ships. As populism and austerity measures are challenged worldwide, the lack of political stability affects global markets.
Lack of Workers: Cost of living has increased while minimum and other wages have remained stagnant, plus the elderly are leaving the workforce faster than others can join it. Many jobs deemed too hard or too poorly compensated (or both) are shunned by a young workforce who need to make ends meet. One urban result is restaurants that can’t keep staff and even close due to complications of being perennially understaffed. A major rural result is that farmers find it hard to find/keep farm labor, leaving food and crops to rot or fail in the fields.
Climate Change: From carbon taxes to natural disasters and changing weather patterns, climate change throws hurdle after hurdle at business. Companies must comply with changing regulations. Governments must identify problems and be part of their solutions. Consumers must pay more for retooled offerings or climate-affected products (like orange prices rising after damaging storms or trade tariffs causing food to rot in ports).
Those are the “big idea” issues facing the world, but economic challenges in the U.S. layer even more on the pile. Like any other countries, there are challenges unique to America that can impact the economy, such as with health care. A lack of affordable health care in America means it’s harder for employees to stay healthy and productive, and everyone pays the consequences.
Infrastructure is a growing problem in the American economy as well. With roadways and bridges increasingly falling to disrepair, the potential for calamity is always right around the corner. Issued every four years, the next American Society of Civil Engineers' "Infrastructure Report Card" is expected in 2021, but in the last two, engineers have given American infrastructure a grade of D+ and say the country needs to inject $4.5 billion before 2025 to rescue America’s roads, airports, bridges, dams and other critical components behind a ticking economy.
Inequality is also a major problem for America, where the wealth gap between the top and bottom earners is wider than ever. The U.S. economy is 70% reliant upon consumer spending, so if the wage gap persists and people have less and less disposable income, the economy could crater.