This year promises to be an unusually pivotal one, as a new American administration intersects with global economic chaos. And, while we expect 2009 to be full of turbulence and short-term uncertainty, it may also reveal some long-term directions for the world. Here are seven possibilities.
1. Are we depressed?
Of course, the biggest single question hanging over the year is the unknown depth of our economic difficulties. Is this an ordinary recession? A super-recession? Or might we find ourselves in a new depression? Already, we're seeing some significant consequences of the economic meltdown, such as changes in the finance system and new roles for government. These and other effects will linger for years. Long-running trends have been interrupted: world trade is expected to drop for the first time in a quarter century, and US retail sales are expected to decrease for the first time since 1995, when the National Retail Federation began tracking them. If the world heads into a true depression, changes in economic patterns, social issues, and consumer values would last a generation, just as they did for those who weathered the economic storms of the 1930s. So far, the worst outcome still appears unlikely.
2. How deep does green go?
This economic downturn will test Americans' commitment to sustainability. Will it all be abandoned if times get tougher and energy prices continue to drop? Aspects perceived as luxuries-from organic food to carbon offsets-may be set aside if consumers feel pinched. On the other hand, investments made now could promote sustainable practices that save resources and money over the long term. Already we're hearing that the Obama administration's stimulus package will include funding to make federal buildings more energy-efficient, which is expected to save $2 billion annually.
3. A new energy economy
Meanwhile, at the structural level, the Obama administration is intent on transitioning to a new American energy economy. This next year will reveal more of the contours of this economy, and begin to hint at the speed at which it might arrive. Despite an ambitious first week for President Obama that included calling for higher fuel economy standards and plans for $500 million in "green-collar" job training, some might be disappointed: a transition will be hugely expensive and sunk investment is vast, so change may be slower in coming than many hope.
4. Friending Grandma?
On the lighter side, this year we may discover what it means when adults swarm on to social networking sites such as Facebook. Will altered demographics change their character? Will some networks become so uncool-or closely watched-that the original users have to migrate elsewhere else to find a home for their indiscreet pictures? Will users self-select by age, so that we see more sites like boomj.com, a social-networking site targeting boomers?
5. The Chinese model under stress
Our analysts have been writing about possible discontinuities for China for a while now (see
this report from 2005, for instance), and we are seeing some of the warning indicators we've discussed in the past. China's growth is slowing as the economic downturn hurts global demand. As Chinese workers lose their jobs, it begins to call into question China's basic social model: rising prosperity in return for popular acquiescence to authoritarian Party rule. We may see just how far this bargain between China and its citizens can be strained. The consequences of instability in China would go well beyond that country's borders: to begin with, it is the world's manufacturer, and a disruption in production would affect the supply of countless consumer goods.
6. A global deal on global climate
Efforts to address climate change issues have been stymied by American reluctance to engage with the issue and by uncertainty about how to bring emerging economies-especially China and India-into the process. With Obama in office, the US position is going to change, and we may begin to see the outlines of the grand bargain on global warming-and thus what the post-Kyoto world will look like for businesses and consumers.
7. America the leader?
Many are expecting a reinvigorated role for the United States now that the Bush administration has moved on. The Obama team and many foreign governments (and publics) seem inclined to resume more cooperative relationships. This year may begin to reveal how receptive the world is to a renewed American leadership role in light of the changes of the last eight years. New economic powers are asserting themselves: China in particular is widely seen as ascendant. While the US was going ever deeper into debt and mired in Iraq, China was amassing immense foreign exchange reserves and offering aid and trade deals around the globe. More broadly, while the US may still have the largest economy and the most powerful military, the economic crisis has generated new levels of distrust of American advice, and some regions are still stung by Bush-era policies. We will begin to see whether all that can be overcome.
Images -- Depression line: Tony the Misfit (Flickr); turbine: bogenfreund (Flickr); flag: aprilzosia (Flickr)
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