Texas Border Business
In the wake of tariffs, immigration crackdowns, geopolitical disruptions, and heightened uncertainty, the pace of US job growth has slowed significantly in recent months and has been trending at a pace well below historical patterns. In addition, performance across industries has recently been notably uneven. While current challenges are clearly affecting near-term expansion, looking out over a few decades, we are still seeing signs of solid potential.
One factor influencing US growth at present is the performance of other countries. Leading global economic analysts are generally projecting moderate growth over the next few years, which is a welcomed signal. However, significant downside risks could affect not only the immediate situation, but also the long-term outlook. One factor which could reduce future gains is the potential for decreased supply chain efficiencies, whether from trade tensions due to policy decisions or ongoing international conflicts.
Another concern is the high cost of energy, which is curtailing growth (as well as quality of life) in numerous countries. Prices are negatively affecting expansion in Europe and other areas, and overall inflation remains an issue. While comparatively low energy prices in the US are making manufactured goods more competitive abroad, there are offsetting downside risks arising from stagnant conditions in other major economies. Fiscal challenges are also increasingly problematic, with many countries facing difficult decisions related to rising debt service, growing entitlements (such as pensions for aging populations), and pressing infrastructure requirements.
Simultaneously, there is potential for technology (especially AI) to reshape international patterns by reducing costs, opening markets, and enabling smaller players. However, optimizing these benefits depends on, among other things, efforts to assure access for emerging countries and stable and predictable trade rules.
Over the long-term horizon, the effects of underlying demographic patterns will further affect overall prospects. As with many nations, US birthrates are falling significantly, and virtually all population gains stem from in-migration. AI is potentially a major factor in dealing with the lack of growth in the numbers of people in prime working age ranges (at least temporarily), but for many essential occupations, hands-on work is essential. The need for sensible immigration policies is clear, as is the need for efforts to encourage labor force participation and productivity.
Even with the current challenges, our analysis of the outlook for the US economy indicates moderate growth, with real gross domestic product expanding at a 2.48% annual rate and a gain of some 79.6 million jobs over the next 30 years. The pace will depend in part on how effectively current issues are dealt with, but the fundamental structure of the national economy remains sound. Business cycles are inevitable, but the US economy has a structural framework conducive to long-term expansion. Stay safe!
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Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group (www.perrymangroup.com), which has served the needs of over 3,000 clients over the past four decades.
