It’s hard to see how the United States can resume the rapid GDP growth necessary to reduce its fiscal deficit when almost 20 percent of its working population is unemployed or underemployed.
A McKinsey Quarterly report on Globalisation’s Critical Imbalances.
Prepare for large currency shifts between developed and rapid developing countries. If we are lucky these will be gradual, but in the currency game shifts can be sudden and dramatic, the so-called judgment days.
However while I do see a shift in currency is required, I would not bet long term against the US economy – it’s proven time and time again how resilient and powerful it is. That 20% un/underemployment can also be seen as spare capacity in the engine. The USA does have an issue with the lower quartile of population though – generally under-educated and stuck in a horrible poverty cycle. It remains to be seen whether they can turn that into competition for China et al.
This chart from the report showing food commodity prices shows that dairy prices have risen a lot from their base – but that they have plenty of room to either grow or contract versus historical norms. Mostly contract sadly.