America enters new economic 'super cycle'
After 15 years of slow growth, economists say the United States is headed for a new era of turmoil.
According to RIA Novosti on October 21, in an analysis by Business Insider, journalist Lynette Lopez said that the growth period of the US economy is over, and it is being replaced by a new "super cycle" with its own conventions.
“For the past 15 years, the US economy has been characterized by weak demand and low interest rates – the aftermath of the Great Recession that lasted more than a decade. Now this is coming to an end. The world has changed and we are entering an era of higher inflation and geopolitical instability that will redirect money flows around the world,” Lopez explained.
Economists say the most prominent feature of the old period was the risk of deflation – the possibility that a lack of “demand” would cause wages and prices to plummet. This was seen as a “trap that is difficult to escape”.
According to Business Insider, the beginning of a new economic cycle shows the results of fiscal policy contrary to experts' expectations.
Now, with the advent of a new “supercycle,” investment managers are once again forced to adapt to a changing set of economic realities, warns journalist Lopez.
It should be noted that this cycle will become a process of “natural selection” and will change the normal cycle of the US economy, forcing all financial centers to adapt to the new conditions of the financial system.
Economists also say that we are now entering a supercycle characterized by three powerful factors. First, higher interest rates - good news for savers, making risk-taking more attractive. Second, geopolitical and economic volatility will create inflationary effects, resurfacing the "ghost" of soaring prices. Third, industrial planning is increasingly influenced by national security concerns, changing supply chains across industries.
One of the clearest signs that a new economic supercycle has arrived is when the financial rules get out of whack. The last supercycle was launched when the US Federal Reserve, in response to the devastation caused by the financial crisis, cut its benchmark interest rate to zero – the first time the central bank had “gone all the way to the bottom”.
In May 2024, the US Congressional Budget Office released a report stating that the country's national debt will increase to 166% of GDP in the next 30 years, and the risk of increasing to 250% of GDP cannot be ruled out.
During Joe Biden's presidency, the US national debt has increased from $28 trillion in 2021 to an unprecedented level of more than $34.5 trillion in 2024.
