Now that a new year and a new administration are upon us, how does the future look for the United States after one of the darkest chapters in its modern history?
Actually, pretty good — albeit, with a great deal of caution — according to economist Chris Farrell during his virtual presentation “Personal Finance: A New Year and a New Administration,” in which he explored numerous fiscal topics ranging from planning retirement and the advent of automation, to the 2008 financial crisis and the ongoing stock market upheaval swirling around Reddit and GameStop.
Describing his predictions as tentative and somewhat foolhardy considering the volatility of modern America, Farrell said there’s reason to be optimistic. He noted people earning more than $60,000 a year are already rebounding from the COVID-19 recession, the housing market is booming, and the average American credit score is improving as people spend wisely to pay down debt, among other positive factors.
OTHER RECENT ROSENMEIER FORUM COVERAGE
“The surprise could be that this economy does better than the models right now are expecting,” Farrell said. “We really could see some genuine movement toward a better economy in 2021.”
The presentation represented another iteration of the Gordon Rosenmeier Center for State and Local Government forum. Farrell is a Minneapolis economist whose writings and commentary on investments, budgets, finance and public policy is widely circulated via Minnesota Public Radio, the Minneapolis Star-Tribune, Bloomberg Business and other publications.
In Farrell’s eyes, the United States is at a key juncture after years of discord and division, but the Biden administration is signaling they are taking some of the right steps — and possibly putting some of the right people in positions of power — to mitigate the looming social problems of today. In this effort, Farrell said, the country’s collective brain trust and its leadership need to find ways to contend with four long-term trends:
The first, Farrell said, is how an increasingly dominant digital economy and the arrival of automation shapes people’s lives now and into the future.
The second, Farrell said, is the emerging issue of an aging workforce and how they’ll continue to contribute to and benefit from society. One illuminating fact is by 2035, Americans older than 65 will outnumber those younger than 18.
The third, Farrell said, is the pressure to support families when people are experiencing skyrocketing student debt, plummeting home ownership, declining ability to participate in the workforce, stagnant wages, dwindling wealth accumulation, and a lack of viable benefits.
The fourth, Farrell said, is the widening gulf of economic inequality between the haves and the have-nots. This coincides with the need for greater inclusiveness for women, minorities and other identities who are falling behind their peers of equal accomplishment and ability.
In essence, much of the economic problems and instability facing Americans today lies in the fact many workers are seeing little if any of the rewards. At the same time, he added, social forces continue to squeeze what remains of their wherewithal to build a life for themselves, and the consequences have been terrible, manifesting in virtually every corner of society.
“These disparities … undermine our productivity. They undermine economic dynamism. They undermine the promise of opportunity in our economy. They’re also morally wrong and the economy hasn’t been working well,” Farrell said. “It hasn’t been working well for too many people. Not just a job, but a quality job — one that offers prospects for advancement, one that offers benefits and decent pay.”
In turn, Farrell said some of the people in positions of extraordinary influence — most notably, Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen — have a solid approach. They share a similar philosophy, he said, where there needs to be precautions taken to curb inflation and boost job creation, but the emphasis has to be labor based, tackling the structural issues that impede the pursuit of prosperity for the workforce at large.
“I’m pretty optimistic,” Farrell said. “We have painted a real optimistic outlook on what the economy is going to be like in 2021. I think there’s some real opportunities, that 2021 could turn out to be a genuine inflection point for a typical worker, that things could be getting better.”