Economic Forces and Trends

The U.S. economy lost 2.6 million jobs in 2008 as the financial crisis wreaked havoc all over the world. Nobody was spared because everyone is interdependent and everything is interconnected. The three inter-related economic forces and trends are globalization, unemployment and debt.

Globalization

• Capital moves within seconds from Tokyo to New York to Paris. Business decisions taken in Dallas affect a factory worker in Manila. An overnight sell-off on the Hong Kong stock market ricochets to London, and then to New York by daylight. This is the reality of globalization and this trend will continue.

Unemployment

• The rapid movement of capital leads to dislocations. Factories are closed. Jobs are lost. Bills go unpaid. Homes are foreclosed. This is the grim reality of a downturn. Fortunately, economic trends are cyclical. Eventually, there is a rebound and growth resumes. Employers start hiring. People start spending. But the pain, while the recession lasts, is real and wrenching.

Debt

• Rising debt is the inevitable result of a recession. The unemployed cannot pay their credit card and mortgage debts. Companies cannot pay their creditors. The government spends more than it receives and piles up more and more debt. Eventually, the government is forced to cut back on spending, and, as the economic trend reverses, the private sector gradually moves in to pick up the slack.