Four Economic Trends That Will Define the 2020’s


Predictions are usually guesses that extrapolate from past trends. These are rarely accurate since the trajectory of the past is not always continued into the future. However, there are some trends that are deeply entrenched and cannot deviate easily. Like a large ocean liner, they are so large that they cannot change course in short order. Below are four such trends that will define the 2020’s.


Record heat waves, forest fires and hurricanes have all increased in recent years. This is sounding the alarm that climate change is not just a future threat and it must be dealt with expeditiously. A number of governments, corporations and investors have taken measures to decrease the consumption of carbon based fuels such as oil, gas and coal. The objective is to encourage investment in alternative fuels such as solar and wind energy.

Energy companies are seeing reduced investment in carbon based fuels resulting in less available oil and gas. Meanwhile, the alternative fuels that are meant to make up the difference are too expensive and not fully adapted to provide sufficient supply. The chart below indicates that most energy is still derived from fossil fuels.

The 2020’s will be the crossover period where we go from an abundant fuel supply that is seeing under investment to a nascent fuel supply that is inadequate. It is as if we are building a bridge between two land masses but have stopped investing in ferries even though the bridge is not yet complete.

This will inevitably create rising fuel prices which will persist until: 1/ alternative fuels are fully available to meet demand at reasonable prices without government subsidies or 2/ investment returns to carbon based fuels.

A possible compromise is to accept that nuclear energy is clean, cheap, and safer than most alternatives. But even if this conclusion is reached it would still take significant time to build sufficient nuclear power plants. There are no quick solutions to address this situation.


The 2020’s kicked off with two major game changers: The pandemic and the war in Ukraine. The decades preceding 2020 were marked by increased globalization as manufacturing migrated to developing countries with lower labor costs. This was marked by the rise of China as a manufacturing powerhouse.

The pandemic provided a rude awakening to developed countries that their dependence on imports put them in a difficult position. The US and others discovered that critical supplies, such as pharmaceuticals, semiconductors and toilet paper were all sourced overseas and were vulnerable to disruptions in those countries.

The war in Ukraine further drove this point home as European countries found that their dependence on Russian oil put them at the mercy of an adversary.

These wake up calls have led to initiatives to return key industries to home soil.

The US share of semiconductor fabrication had decreased from 40% in 1990 to 11% in 2021. The CHIPS Act is currently making its way through Congress to increase investment in US semiconductor manufacturing.

Last year the White House issued an executive order to increase the purchase of domestically produced goods by the Federal government.

These reshoring initiatives are coming at a time when the US workforce no longer tolerates low wages and poor working conditions. The return of industry and manufacturing to US shores will create inflationary pressures as wages and regulations in the US are greater than in those countries where goods were previously manufactured.


In the 1970’s the baby boomers were hitting their mid-20’s and started getting married and having children. The 2020’s will have a similar period of household formation as Milennials and Zoomers form families.

The US has been able to maintain a large working age population in part thanks to immigration. However, a number of other major economies including many European countries, Japan, South Korea and China are expecting large declines in the working age demographic.

The 2020’s will therefore be a period with a large unproductive older population and a relatively smaller working age population. This combined with deglobalization will make it more difficult to find adequate labor.


Digitalization, or the transfer of functions to information technology, has been increasing steadily for the past fifty years. This is not a new trend but one that is expected to continue through the 2020’s and significantly impact economics and behavior.

When the future writes the history of the internet they will say that it was born in the 90’s and was ultimately tested in 2020 with the pandemic. That difficult period showed that a large part of the economy can function online. Of course one of the biggest results of this test is the work from home movement. This will change where people live, how they work and the institution for whom they work.

Two other trends that started in the 2010’s and should continue through the 2020’s include cyptocurrencies and the Metaverse. But of these four forces, digitalization is the most difficult to predict. Few foresaw the growth of the PC in the 80’s, the internet in the 90’s, social media in the 2000’s or cyptocurrency in the 2010’s.


These four forces are like a boulder rolling down a hill. The boulder has already begun its descent so it is not difficult to forecast its continued momentum. A deviation of the boulder’s route is possible in some of these cases. Decarbonization and deglobalization can see a reversal through a shift in policies but such changes would not occur overnight. For instance, recarbonization would take time to build investment and capacity in the fossil fuel industry. Demographics also cannot be changed within a generation since it takes twenty years to make more working age people.

In reviewing these four forces we see that the first three are inflationary whereas the fourth improves productivity. The 1970’s saw inflationary pressures early on followed by a pull back and then a return to inflation toward the end of the decade. Such fluctuations may be possible in the 2020’s as well. Policy and markets may cause inflation to retrace but because of these persistent four forces it will always be simmering for years to come.