Aug 29 2010
Economic news — e.g., unemployment, economic growth, housing — suggests the hoped-for U.S. recovery has stalled. A couple of weeks ago the New York Times (8/15/10; J. Sommer) openly speculated about the possibility of “double-dip” recession.
Are we headed toward a Double-Dip recession?
The Huffington Post (8/16/10) reports that Nouriel Roubini of Roubini Global Economics and New York University, indicated that the “Risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%.” And both David Rosenberg (the Gluskin Sheff economist) and Yale’s Robert Shiller (co-author of Animal Spirits) agree that the odds of a double dip recession in the U.S. are “higher than 50-50.” They both blame the problem on “jobs.”
Economists are concerned by the unexpected recent decline in U.S. GDP; for example, Q4 2009: 5.6%; Q1 2010: 3.7%; and Q2 2010: 1.6%. David Rosenberg predicts that the U.S. GDP for Q3 2010 “will be negative … and that the recession never ended.”
… Or a Japan-style “lost decade”?
Others even suggest we may be heading for a Japan-style “lost economic decade.” Michael Darda of MKM Partners (Wall Street Journal, 8/13/10) cautions that “These concerns are not without merit.” But he suggests that,
There are key differences between where we are now and where Japan was … (that) make it less likely that we’ll succumb to a deflationary double-dip recession or a lost decade.
To help reduce uncertainty and revitalize the economy, Darda recommends that we create fiscal policies that are “sustainable, pro-growth,” and that increasing marginal tax rates would negatively affect productivity and government revenues. In general, according to a WSJ editorial (8/17/10),
The way to avoid Japan’s fate is to avoid the same policy mistakes, which means returning to the policies of the 1980s that revived the U.S. after the last Great Recession.
What about the end of American optimism and the “new normal”?
Although we should remind ourselves that we’re immersed in a major political season, some commentators do insist that our economic challenges are indicative of what the future holds for the world and U.S.: “the new normal.” U.S. News & World Report editor in chief Mortimer Zuckerman (WSJ, 8/16/10) asks,
What was thought to be normal in the context of post-World War II recoveries? One is that four quarters into the recovery, real GDP would expand at an annual rate over 6%.
Recall that U.S. GDP for Q2 2010 was just 1.6%.
Zuckerman points out that we’ve spent trillions of dollars on stimulus and bailout packages and yet nothing is working “normally.” Then Zuckerman wisely illuminates the issue by asking this long-term question:
Are we at the end of the post World War II period of growth?
The answer is: Yes, but we are about to enter into a new 1960’s, Camelot-style decade — a Maslow Window — where growth and prosperity will exceed even JFK’s Boom. These transformative, twice-per-century decades feature very rapid, but sustained economic growth and are punctuated by great explorations (e.g., Lewis & Clark), huge technology projects (e.g., Panama Canal), and sadly even major wars (e.g., W W I). The next golden age of prosperity, exploration, and technology should arrive by 2015.
What will trigger the Great Boom of 2015?
Every Maslow Window back to Jefferson and Lewis & Clark — including the 1960s Apollo Moon decade — features the rapid ascent of many in society to elevated levels in Maslow’s Hierarchy (expanding their world-views) due to affluence-induced ebullience generated by an exceptional boom. Indeed, according to this theory, without the Boom of 2015 there will be no widespread ebullience and hence no Maslow Window.
Here are a few scenarios that could be a bridge from where we are to the next Boom by 2015:
a) The Milken Institute Ramp-Up Scenario:
According to Ross DeVol (WSJ, 8/25/10) gloom and doom can be economically devastating.
There’s a point at which pessimism becomes a self-fulfilling prophecy, scaring business away from investing or hiring. The dark tone of today’s discourse is at risk of doing just that.
Milken’s report on …America’s Return to Growth, based on extensive econometric analysis, features “measured optimism” because “A return to modest but sustainable growth is at hand.” They see the U.S. economy aided by rapid growth in Asia, strong investment in equipment and software, and record low interest rates. They reject the “new normal” as a barometer for long-term U.S. growth rates.
According to Milken, the ramp up to the next boom begins with a real plan to reduce the deficit, temporary extensions of the Bush tax cuts, and a more positive attitude toward job-creating businesses.
b) The 2015 TechCast.org Green Boom:
While the Milken ramp-up scenario will begin to restore confidence in the economy and stimulate more businesses to think expansively, TechCast, founded by former George Washington University professor William Halal, is forecasting a huge boom near 2015.
The constant drumbeat of cascading business failures is certainly daunting, but technology forecasts suggest that a green revolution, advanced auto designs, surging e-commerce, and other new business sectors are poised to lead the global economy out of today’s recession, producing a new economic boom at about 2015 … I lead a research team that forecasts the evolution of technology and its massive impacts that are changing the world. We’ve developed an intelligent website (www.TechCast.org) that pools the knowledge of 100 experts worldwide to forecast breakthroughs in all fields … Our forecasts show that today’s surging interest in green business should take off in four-five years … Entrepreneurs are working on alternative energy sources – wind turbines, biofuels, nuclear plants, and solar cells. This entire “green revolution” is growing 30-50% per year, roughly the same rate of the famous Moore’s Law that drives information technology to double every 2 years … Green technology is roughly a $500 billion market and expected to reach $10 trillion in 2020, larger than autos, health care, and defense.
A boom this size could easily produce the large-scale ebullience that would drive the 2015 Maslow Window, including the development of Space Based Solar Power as the ultimate source for global power.
c) The 2009-2015 Global Infrastructure Boom:
Stanford University, as part of its Collaboratory for Research on Global Projects, sponsored a paper in 2009 by Eric Gerritsen of Global Internet Advisors, on “The Global Infrastructure Boom of 2009-2015: Strategic Economic Consequences for America, China and the Global Economy.”
Gerritsen observes that,
In response to the financial crisis of 2008 governments around the world have pledged to spend trillions of dollars over the next few years on what is loosely called “infrastructure” and what amounts to the biggest global build-out of physical economic assets in the history of man.
This global infrastructure boom will intensively unfold between 2009-2015 and will transform how the world looks, gets educated, moves goods and services, creates wealth, treats the sick, cares for the poor, powers its homes and businesses, and wages war.
The amounts of infrastructure money about to slosh into the world economy defy imagination: The Obama Administration will spend $150 billion of its $787 billion stimulus plan on infrastructure and is expected to add to that; China has pledged $585 billion and stands ready to do more; India is expected to spend $500 billion on infrastructure over from now till 2015; the EU $252 billion; Japan $129 billion; Canada $12 billion; Australia $4.7 billion, Singapore $13.8 billion; Germany $42 billion; and so on.
Gerritsen asserts that, during the next 5 years, the global infrastructure boom will have significant global economic, political, and technology impacts, and that it will likely drive “economic system convergence.” How this will play out for the relative positions of the states involved is anyone’s guess at this point. But it does provide a positive framework for the development of large-scale infrastructure (e.g., space based solar power) in space, as the 2015 Maslow Window swings open.
d) The New International Space Age:
Both long-term (e.g., 200 year long wave timing) and near-term (e.g., the Panic of 2008) indicators point to a new Maslow Window opening near 2015 that will feature the new international Space Age. Please search the last 2+ years of this weblog for the details, but the signals continue to appear.
For example, Putin announced this weekend that Russia will launch its manned space missions from a new space center 3600 miles east of Moscow, starting in 2018. In a display of Maslow-style ebullience and national pride, he called the construction “one of the biggest and ambitious projects of modern Russia” which “gives opportunity to thousands of young professionals to use their talent.” Recently I have suggested that Russia and China may decide to leverage their joint 2011 robotic mission to Phobos into a major bilateral collaboration for manned Mars colonization sometime after 2015. If taken by surprise, this could propagate Sputnik-like shocks though America’s economic, political, military, and educational institutions.
I’ve pointed out previously that, ironically — based on the last 200 years of macroecnomic patterns and global trends — the Panic of 2008 shows we’re within 3 to 5 years of a major economic boom and a new international Space Age. But the Panic/Recession seems to have triggered a political realignment in the U.S. that led to President Obama’s election and is continuing.
As usual over the last 200 years, this transformative event is announcing the approach of the next golden age starting in 2015, and has many interesting parallels with the Panic of 1893 and the ascendance of the ultra-ebullient Theodore Roosevelt during the Peary/Panama Maslow Window. Like a century ago, our current political realignment is motivated by — not political party or social class — but the return to prosperity. It’s always interesting that prosperity becomes Priority #1 as we approach a new Maslow Window.
The U.S. political realignment seems to be continuing based on the estimated 300,000+ attendees — an “enormous and impassioned crowd” — at yesterday’s spiritual rally in Washington, D.C., as suggested by today’s New York Times front page photo (8/29/10).