Alvin Toffler was a futurist who wrote extensively about the digital revolution. He popularized the term “information overload” and wrote the landmark book Future Shock, which has sold millions of copies and remains in print today. He died last year, but left a legacy of compelling ideas. I thought about him and his words recently as I led a discussion with the executive committee of the Salt Lake Chamber Board of Governors. We discussed major trends impacting Utah. I thought Utah Business readers would enjoy a quick synopsis of our discussion.
Toffler said, “The future always comes too fast and in the wrong order.” It’s true. We have a hard time keeping pace with and predicting change. I think, however, there are several significant issues and trends right in front of us that we need to better understand.
The first is the rise in U.S. public debt. Economists like to measure fiscal sustainability by comparing the size of public debt to the size of the economy. The ratio of public debt to gross domestic product (GDP) provides an indication of our ability to make future payments on our debt. It is also a general measure of economic health.
For most of my professional life, the U.S. debt-to-GDP ratio has hovered around 60 percent. Today it stands at 105 percent. By way of reference, Germany’s current debt-to-GDP ratio is 68 percent, France’s is 96 percent, and Japan’s is 250 percent.
I think it’s fair to ask the question, “Do we have a looming debt crisis?” I’m particularly concerned about the impact of rising interest rates on our ability to service growing debt.
It’s no secret that millennials live differently than their parents. What’s less talked about is how much they live with their parents. In 2015, approximately one in three adults in Utah between the ages of 18 and 34 lived as a “child of a householder.” Millennials have many interesting traits; one of them is a penchant to live with mom and dad.
People are choosing to live in cities. Downtown Salt Lake City is awash in new apartments. It took 100 years for downtown to reach 5,200 apartments. We are on track to double that amount in the next 10 years! Watch for Utah to continue to get more and more urban and remember … urban states face urban problems like congestion, crime, unaffordable housing and unclean air.
The highest internet connecting speeds in the country can be found in Washington, D.C. (Source: Akamai, a prominent content delivery network). The number two spot, however, belongs to the Beehive State. There is no other western state in the top 10. This bodes well for the Utah economy because in the internet age, speed wins. By this measure, Utah’s rise in the tech world looks to have a bright future.
Automation continues to change the economic landscape. A recent analysis by Utah workforce economist Mark Knold showed that the same amount of Utah workers is now producing twice the value of product. That’s a stunning rise in productivity.
Complementary research prepared by Jim Wood, a senior researcher at the Kem C. Gardner Policy Institute, revealed that Utah’s manufacturing sector is less vulnerable to imports because of the types of things we manufacture (advanced manufacturing). For this reason, Utah manufacturing jobs increased by nearly 6 percent since 1995, while the United States lost nearly 29 percent over the same period. I look for automation to continue to pay dividends to the Utah economy.
Utah fertility rates are at a historical low. Moreover, people are living longer. This means that Utah’s median age is climbing as our population gets older each year. This changes everything. Bill Gates once said, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next 10.” We need to think more about the transportation, housing, health care and economic consequences of an aging population.
So, what does all this mean and what should we be doing? I suggest the following:
First, resist change at your peril. Toffler said, “Change is not merely necessary to life. It is life.”
Second, remember to keep a broad perspective in your daily activities. Toffler said, “You’ve got to think about big things while you’re doing small things, so that all the small things go in the right direction.”
Third, commit yourself to continuous learning. Toffler said, “The illiterate of the 21st Century will not be those who cannot read or write, but those who cannot learn, unlearn and relearn.”
And finally, don’t chest pound and focus too much on your past accomplishments. Toffler said, “The first rule of survival is clear: Nothing is more dangerous than yesterday’s success.”
Natalie Gochnour is an associate dean in the Davis Eccles School of Business at the University of Utah and chief economist for the Salt Lake Chamber.