The ground beneath our feet is not stationary. Plates are shifting and the globe is realigning. No I'm not talking about global warming or huge earthquakes. I'm really talking about the economic, social and cultural changes that are taking place around the globe and here in the United States. When it comes to economics, life truly is survival of the fittest. And the U.S. economy, which has enjoyed the #1 perch for a long time, is starting to look somewhat endangered. Are we headed for extinction? Not by a long shot, but the signs are that the challenges ahead may be difficult to navigate.
Inflation:While general goods, food and apparel has stayed relatively flat in pricing, the big ticket items have soared over recent years. Cheap imports from Asia have not done anything to push down the costs of housing, college educations, health care or energy. These areas are experiencing record highs for many Americans. Even though the housing market is robust right now, American Demographics recently reported that many young professionals are priced out of the housing market. With small houses in some markets going for hundreds of thousands of dollars, generations X and Y face difficulties finding affordable housing.
The other day I overhead a co-worker discuss with my brother the cost of sending a child to college. Depending on the university and your residency status, many schools cost between $20,000-40,000 per year. Who can afford that much money? And is it worth it? In the near future, will many Americans not automatically think that college is the logical next step after high school? Will universities have to become leaner and meaner to compete?
Health care keeps on going up and up as we medicate more and more. HMOs and cheap co-pays have led people to rush to the doctor for every possible health concern. This has led to skyrocketing costs. When you factor in the aging population and the likelihood that the boomers may live longer than the WW2 generation, you have lots of elderly people to care for and not a lot of people to flip the bill.
And while our gas may be cheap compared to Europe or other areas of the world, energy prices continue to go up and up in the United States. There is no relief in sight. Every dollar spent at the pump is one less dollar spent on anything else. When you look at this across the entire economy, it has a major impact on consumer spending.
The big ticket items listed above gobble up a lot of cash. This means there is less discretional income available for a variety of non-necessities. Wages are not leaping up to offset these higher costs. Something has gotta give. And I think it may end up being the emerging generations that have to deal with much of the economic burden caused by these factors.
This is the first in a series of blog entries on cultural, economic and social changes that will impact the U.S.A. in the future. Stay tuned for more forecasting.
