There Are Deep Anxieties About Our Individual Places in the Economy of the Future

While attending the World Economic Forum in Davos a few weeks ago, where there was an almost nonstop discussion of economic conditions for the better part of a week, I became struck at how much anxiety there seemed to be in the air about our individual long-term economic futures. It was not the usual uncertainty about economic aggregates like GDP over the next few quarters, but about the indefinite future, where we are going.

 

Sessions about rising inequality, new technology that replaces jobs, or neuroscience, or other new developments that could be disruptive to our lives, seemed to affect the mood of the whole meetings. It seems to me to be a change in emphasis. So much economic discussion in years past has focused on the next few quarters of GDP growth, as if this were all we worried about. Consumer confidence indices tend to focus mostly on the next six months to a year, as if that dominated people's thought. But much bigger worries abound about coming decades, about the rest of our lives and of our children's lives.

My recent third edition of Irrational Exuberance (Princeton 2015) and my recent New York Times column talked about these issues and about their implications for the economy. It may seem paradoxical to some, but these increasing long-term fears may boost prices of stocks, bonds, and real estate to high levels while at the same time making the economic recovery anemic.