What I'm Watching...

As an avowed global generalist, I am constantly scanning the horizon to see how developments in economics, geopolitics, technology, demographics, and social trends may impact our lives. I read an eclectic collection of books, magazine articles, and academic papers and speak with a diverse group of business leaders, government officials, academics, journalists, and ordinary people from all walks of life. I do this because I firmly believe that the best way to navigate uncertainty is to focus on connecting dots, rather than generating them.

One of the most common questions I get asked in the course of my travels is “What are you watching?” Interestingly, the question is often asked after I’ve stepped off the stage or when I’ve finished a boardroom presentation. I’ve recently taken to asking my question-askers why they’ve asked the question when they do…and the responses I’ve received are fascinating; here’s my favorite one:

“You’re here as an expert, and so we’re supposed to ask you what you think…but I really want insight into how you develop those thoughts. I know you're thinking will change over time, and that will depend upon what happens in the world, so I thought it might be interesting to hear where you’re focused. As you mentioned, your position is structurally different than ours and it gives you a breadth I don’t have given my role…I really just want to tap into your thinking process and see what has your attention…”

It’s in that spirit that I share what I’m watching today. The following three developments have caught my attention. The first two are obviously important and will almost certainly affect all of us; the third might be dismissed as a fringe topic, but it has my attention because it has the potential to be very consequential to our lives, depending upon how future events unfold. And of course, there are lots of other topics worthy of attention that I don’t profile here. Regardless, I offer the following discussion with a hope that it spurs you to think differently about the future.

#1: The American Consumer

US consumers have continued spending at unexpectedly robust rates. Given consumption accounts for around 70% of America’s GDP, weakening consumer confidence or increasing financial distress would definitely hurt the US economy. The restart of student loan repayments, increasing labor unrest at the UAW and more recently in Las Vegas, the ongoing risk of a government shutdown, and potential labor market disruptions from technological innovation are leading to a simple question: How long can consumer strength continue? And let’s not forget that geopolitical uncertainties are keeping food and fuel prices well above pre-Ukraine levels, a reality that continues to stress many household budgets.

SO WHAT? If the consumer slows, as looks increasingly likely, then it would follow that the economy as a whole would also slow, probably tipping the United States into a recession, leading to job losses, which could generate additional cutbacks in consumer spending. Will such conditions reveal excessive leverage in the mortgage markets, driving real estate markets lower? Will a recession impact the upcoming US presidential election? What are the ramifications for the financial markets? How will Congress or the Federal Reserve react to a shrinking economy?

#2: China’s Economic Slowdown

The Chinese economy has been rapidly decelerating, leading pundits to worry that the world’s second largest economy may drag the world economy down with it. The country is drowning in debt, there are signs of overcapacity everywhere, and youth unemployment has been rising rapidly, raising the risk of potential domestic unrest. In addition, US multinationals have concluded that China is “uninvestable” as Beijing continues fining and raiding foreign companies operating within their borders. (In fact, the PRC recently barred an employee of a US firm from leaving Mainland China.) The implications of continued Chinese economic weakness would be felt across many commodity, goods, and services markets.

SO WHAT? A rapidly slowing China might lead citizens to demand a change in political leadership. Could such a threat to Beijing spur CCP leaders to crackdown on unrest like the world witnessed in June 1989? Or might the Chinese Communist Party use a diversionary foreign escapade to generate unifying nationalism within the country? Could American businesses de-coupling from China accelerate Beijing’s plans to “reintegrate” Taiwan? Or is China’s economic house of cards simply collapsing upon itself? Could such an outcome lead to a disintegration of the PRC (like the USSR) as provinces such as Guangdong and Sichuan establish themselves as independent states?

#3: Life on Other Planets?

As technologies for gathering data in outer space continue to improve, we’re learning more and more about the potential for life on planets other than earth. NASA recently reported a fascinating observation about K2-18b, an exoplanet in the habitable zone approximately 120 light years away from Earth:

A new investigation with NASA’s James Webb Space Telescope into K2-18b, an exoplanet 8.6 times as massive as Earth, has revealed the presence of carbon-bearing molecules including methane and carbon dioxide. The abundance of methane and carbon dioxide, and shortage of ammonia, support the hypothesis that there may be a water ocean underneath a hydrogen-rich atmosphere in K2-18 b.

A more detailed report about the observations also went to note a possible detection of dimethyl sulfide (DMS) on K2-18b, noting “On Earth, this is only produced by life. The bulk of the DMS in Earth’s atmosphere is emitted from phytoplankton in marine environments.” (emphasis added)

SO WHAT? One possibility is that K2-18b might serve as a potential home for humans if we manage to destroy Earth…but would another hospitable planet decrease our care for this one? Alternatively, if K2-18b had intelligent life of its own, could the emergence of a common threat such as aliens be a unifying force, leading all Earthlings to see themselves “on the same team” and combine forces to address the challenge of another species? (Recall that Reagan and Gorbachev agreed to put aside their differences if aliens invaded Earth.) Or could this development spur additional research funding, newfound excitement in STEM education, or a boom in science-fiction writing (and reading)? Or perhaps this development is just noise that won’t really affect any of us—ever?

These three developments are just a few of the many topics that have my focus these days. I’m also intrigued by the emergence of next-generation nuclear technologies, the US-China war and its impact on commodity markets, Iran’s increasingly aggressive stance towards the West, the relationship between big technology companies and governments, the demographic implications of robots, and the future of cryptocurrency markets. I’ll be writing about these and many other topics in the weeks and months to come, so please stay tuned!

About Vikram Mansharamani

Dr. Mansharamani is a global generalist who tries to look beyond the short term view that tends to dominate today’s agenda. He spends his time speaking with leaders in business, government, academia, and journalism…and prides himself on voraciously consuming a wide variety of books, magazines, articles, TV shows, and podcasts. LinkedIn twice listed him as their #1 Top Voice for Global Economics and Worth profiled him on their list of the 100 Most Powerful People in Global Finance. He has taught at Yale and Harvard and has a PhD and two masters degrees from MIT. He is also the author of THINK FOR YOURSELF: Restoring Common Sense in an Age of Experts and Artificial Intelligence as well as BOOMBUSTOLOGY: Spotting Financial Bubbles Before They Burst. Follow him on Twitter or LinkedIn.