If you think of the U.S. as a global leader, these are troubling times. This past week's G-20 meeting showed how weak the U.S. has become. At a big international summit, the president seems uninterested and withdrawn.
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| Trump has surrendered, but the nation hasn't |
In the years following World War II, Europe's and Japan's economies were in ruins. Mostly unscathed by war and economically empowered by wartime production, the U.S. inherited its position as the world's dominant superpower. Industrial-era cities were at their high. Factories were booming. The parents of baby boomers were expanding into the suburbs, financed by government-backed mortgages and new highways. We had visions of man setting foot on the moon.
For parts of America, much has gone wrong since then. Europe and Japan rebuilt their economies, and the rise of China and other emerging markets led to competition for American manufacturing jobs. Outsourcing and productivity improvements slowly hollowed out America's factories. Continued domestic migration south and west, along with lower fertility rates, put demographic strains on the Northeast and the Midwest. Highways may have been a boon for the American economy, but communities far from them slowly became economically irrelevant. In stagnant communities, strains from pension costs and aging infrastructure have led to a host of financial, social and political challenges. The shock of the 2008 financial crisis was a body blow from which many communities are still reeling. The election of Trump was a response to all of this.
Globalization and demography certainly created American losers -- to borrow Trump's terminology. But those forces also created winners, who represent America's future. The areas with growing populations have the best prospects.
States in the South and the West now account for the bulk of American population growth. Whereas postwar population growth was somewhat homogeneous -- white families settling into newly created suburbs -- today's population growth has a decidedly more diverse, global look. It's first- and second-generation Hispanic families settling all over the South and the West. Asian immigrants moving to the West Coast and large metro areas in the South. African-Americans moving from struggling Midwestern cities like Chicago to more vibrant Southern ones like Atlanta. And continued white migration from the Northeast and the Midwest to the South and the West. As Adam Carstens of PQ Partners showed, roughly 80 percent of the U.S. population growth for ages 25 to 44 this decade is taking place in the South and the West, and the vast majority of that is non-white.
Ongoing trends in the global economy favors these parts of America as well. Think ahead 20 years to when millennials are running the world. Solar energy should represent a much larger share of global energy consumption, with oil far less important. This is great news for energy consumers like the Sun Belt, and bad news for hydrocarbon producers like Russia and the Middle East. The role of technology should continue to increase, with West Coast American companies like Google, Apple, Facebook and Amazon better-positioned to capitalize on these trends than anyone else in the world. The development of autonomous vehicles could help unchoke traffic gridlock in sprawling car-dependent metro areas in the South and the West.
As the global economy continues to shift from manufacturing to services, U.S. media, content and culture have more and more influence around the world. Whether it's the aforementioned technology companies, Hollywood, Disney, global brands like Nike and Starbucks, or athletes and musicians like LeBron James and Ariana Grande, here too America has unparalleled dominance. The U.S. continues to have the largest, deepest and most transparent capital markets in the world, with Wall Street banks in their best health in decades. As the emerging world like China becomes wealthier, it also seeks to become more educated. Here, too, America is poised to thrive. One of the noteworthy aspects as China is supposedly set to wrest the global leadership mantle from the U.S. is that those in China with the means to get out want to buy real estate in the U.S. and send their children to U.S. schools.
And then there is the matter of demography. Europe, Russia and Japan have shrinking populations. China's working-age population has already peaked, and is set to decline by 90 million by the year 2040. The only large and powerful nation in the 21st century that has a reasonable birthrate and is also an attractive destination for immigrants is the U.S.
Trump's America, with its backbone as factory towns in the Midwest, may be in decline. But America's future, one based on thriving, diverse Sun Belt metropolises like Los Angeles, is poised to lead the world of the future.
By Conor Sen
Source: Bloomberg
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