Economic Development Industry Trends
The key trends that are impacting the economic development industry in the United States are extreme weather, low unemployment rate, working baby boomers, and rising oil and gas prices. According to a recent Prudential survey, nearly half of the baby boomers are opting for semi-retirement and are not willing to give way for the younger generation. Below you will find a deep dive into our findings.
In the pursuit of finding the information on trends that impact the economic development industry in the United States, we scouted through several media sources, research papers, and statistic websites and compiled a list. From this list, we chose the most significant trends based on the credibility of the data source and the number of times they were referenced by experts and thought leaders in economic development. For instance, Kimberly Amadeo, an experienced senior-level corporate officer in economic analysis at The Balance and president of WorldMoneyWatch.com, quoted several times that extreme weather has affected many parts of the United States.
Presented below is a brief description of each of the key trends affecting the economic development industry in the United States.
Extreme weather has caused a lot of damage and financial loss in many parts of the United States and is expected to increase by 50% by the year 2100. According to the Accountability Office, extreme weather due to climate change will cost the United States government $112 billion per year. In addition to that, in March 2019, the Federal Reserve cautioned that climate change could threaten the financial system by forcing farms, utilities, and other companies to declare bankruptcy.
Munich Re, the world's largest reinsurance firm, warns that insurance firms are forced to raise the premiums to cover the rising costs from extreme weather. Global warming is a challenge to economic development, but at the same time, it is an opportunity for the construction industry that repairs the damages caused by extreme weather such as hurricanes.
The current unemployment rate is about 4%, and in some parts of the country, it is below 3%. The problem faced by companies with such low unemployment rates is that the supply of workers is less compared to job availability. Under this circumstance, companies are forced to pay more in labor costs to attract the best workers. This trend of businesses paying more labor costs will continue as long as unemployment rates remain very low. In addition to that, the shortage of labor will occur in high-demand, skilled occupations such as software developers, technical support, skilled manufacturing, welders, etc. While a low unemployment rate is a positive sign for workers, it is a challenge for companies to keep pace with rising minimum wage rates.
A recent survey shows that baby boomers aren't retiring and over half of those aged between 45 and 75 were forced to delay retirement because of the recession. The theory behind the trend is that the Great Recession has left emotional scars in them, which created a retirement crisis. The older generations are not willing to give way for the younger generation. It makes millennials adapt to the trend by avoiding the traditional career path and use technological innovation such as social media to create new jobs that don't exist today. The trend is a challenge to the younger generation and the whole economy, as the vibrant working force is not optimally utilized.
The Energy Information Administration (EIA) predicts that oil and gas prices will rebound in the future and will reach $113.56 per barrel of Brent oil by 2050. Higher oil prices mean higher gas prices, which further raises the cost of food. In addition to that, oil prices depend on the value of the US dollar. For example, when the dollar rose 25 percent in 2014 and 2015, the oil prices fell to an eleven-year low at the same time. It is a challenge to the economy, as it directly affects every part of the development.
To summarize, the most significant trends that will impact the economic development industry in the United States are extreme weather, low unemployment rate, working baby boomers, and rising oil and gas prices. Although low unemployment seems to benefit the workers, companies are forced to pay more in labor costs to attract the best workers at these times.