Top of Mind for Global Executives

C-suite leaders from the world’s best companies turn to World 50 Group for pragmatic perspectives on urgent business topics and macro trends. As U.S. corporate debt issuance increased by 66% year over year through the first quarter of 2024—and the increasing cost of capital drives European corporate default rates up—executives have been keeping a pulse on growth. World 50 members recently spoke with several global economists, who shared insights into navigating an environment of higher-for-longer interest rates.

Five factors drive global economic growth.

Following the constant stream of economic data is overrated, said Robert Steven Kaplan —former president and CEO of the Federal Reserve Bank of Dallas —during a Board Excellence conversation. Instead, the newly named vice chairman of Goldman Sachs advised leaders to focus on five drivers of global growth: demographics, decarbonization, deglobalization, technological disruption, and the end-of-the-debt super-cycle.

After a COVID-19 relief package four times bigger than the Marshall Plan, the U.S. debt-to-GDP level stands at 100%, with debt expenses approaching $1 trillion next year. In practical terms, said Kaplan, the U.S. is spending its money for the next crisis today. These policies stimulate the demand for workers, even as U.S. workforce growth is sluggish without immigration. That may help explain why the U.S. economy currently outperforms other countries and why U.S. inflation remains elevated.

History offers a reference point for today’s economy.

International economist Baroness Dambisa Moyo , director at 雪佛龙 and Condé Nast , sees today’s global economy in a historical context. According to Moyo, who joined members at the Summit in New York in May, the U.S. recently exited the Golden Age, which she likened to the Gilded Age that featured high economic growth, high levels of globalization and immigration, a powerful private sector, a comparatively weak government, and a high degree of inequality.?

The factors that sunset the Gilded Age—World War I, the Spanish flu pandemic, and the stock market crash of 1929—foreshadow the crises that followed the Golden Age: a recession, global wars, and COVID-19. What to expect next: slow growth, bigger governments, deglobalization, anti-immigration sentiment, and a weaker private sector. Nevertheless, Moyo sees opportunity ahead.

Are India and China on a collision course?

To help guide members through business planning, Leo Abruzzese —former global director of public policy at the Economist Intelligence Unit —shared what multinational firms should expect for the remainder of 2024. The U.S. economy will grow by 2% in 2024, whereas European economies will “barely grow by 1%.” He predicted one or two rate cuts in the U.S. in late 2024 but expects Europe to cut rates sooner, which happened this month, when Sweden’s central bank became the first in Europe to cut interest rates. He noted one looming downside to India being the fastest-growing major economy in the world: Tensions may escalate with China.

Stagflation? Not so much.

Roger W. Ferguson, Jr. —vice chairman of the Federal Reserve System and former president and CEO of TIAA —has earned a reputation for leading well through crises, such as 9/11 and The Great Recession. From his perspective serving on the boards of Alphabet, Blend, Corning, and IFF, Ferguson is optimistic about the 2024 economy, whether interest rates are cut once, twice, or not at all. He also believes that energy independence insulates the U.S. from stagflation, but the economy is prone to supply shocks. That calls for CEOs who can build resilience with tabletop exercises and scenario planning. The challenge? Making the stakes feel real to scenario planners. His advice to members: Ground exercises in a crisis from the organization’s past rather than theoretical black swan events.

Labor markets enter a new era of globalization.

In addition to evolving compensation structures, Nela Richardson —chief economist and ESG officer at ADP —called attention to a new globalization in labor markets, where companies hire the best talent from anywhere. Data points from 世界银行 , the United Nations , and the U.S. Bureau of Labor Statistics depict the supply and demand:

• The U.S. represents 5% of the global workforce, and that figure is shrinking. Fifty-seven percent of the global workforce resides in East Asia, where skills are easier to acquire.
• In the past decade, the non-working population in the U.S.—people under 14 and over 65—grew by 13%, compared with 3% growth in the working-age population.

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