Four economists discuss the trends in the global economy they will follow in 2024.
Emily Blanchard, Associate Professor, Dartmouth Tuck School of Business
Emergency planning is in full swing. Since the disruption caused by COVID a few years ago, businesses and organizations have diversified their supply chains, grown their customer base, and reworked their inventory strategies. Many are reconsidering where and how they make things in the world, and some have already reorganized their global footprint. This year promises more of the same, but with greater urgency as uncertainty grows amid geopolitical conflict, powerful (and likely disruptive) new technologies, and increasing climate shocks, including an unusually high El Niño cycle. severe. Not to mention a series of major elections around the world over the next twelve months. Wise leaders will wait, watch closely, and implement not only Plan B, but also Plans C, D, E, and F.
Davin Chor, AAssociate Professor and Chair of Globalization, Dartmouth Tuck School of Business
I make this prediction with a sense of apprehension and even disgust. But as a trade economist, I fear that protectionist sentiments and policies will intensify around the world as 2024 progresses. It has been more than five years since trade tensions between the United States and China came to light in 2018 with a series of tariff escalations. Today, American public opinion toward international trade remains lukewarm, to say the least. This is due to long-standing concerns about the impact of trade with China on manufacturing jobs, as well as supply chain disruptions that have dominated economic headlines since the Covid-19 pandemic. So far, the Biden administration has responded by actively urging companies to rethink their international supply chain strategies – turning to “friendshoring” or “nearshoring” – while at the same time embarking on a set of ambitious industrial policies to promote American manufacturing, particularly in such critical goods as semiconductors. With the U.S. presidential election cycle in full swing in 2024, anti-globalization sentiment is poised to increase on both sides of the political aisle, especially as the issue of international trade has come into focus. of the public closely linked to national security concerns and geopolitical issues. competition with China.
These reservations are not limited to the United States. Across the Atlantic Ocean, there is a growing sense of unease over China’s aggressive use of domestic subsidies for electric vehicles and how this could set back European automakers’ ambitions in the sector , whose strategic importance has been amplified in the context of the ongoing climate transition. For its part, China will not stand idly by – and will likely engage in political retaliation – should the US or EU adopt trade policy measures perceived to target China’s national interests. Meanwhile, the World Trade Organization remains powerless to arbitrate these disputes, with appointments to its appeals body frozen for several years. It’s not a pretty picture. Unfortunately, this means that voices speaking out in favor of free trade – and the shared prosperity it enables – risk being stifled.
Esteban Rossi-Hasnberg, Glen A. Lloyd Distinguished Professor, University of Chicago
The year 2024 will be profoundly marked by one of the most dramatic recent changes in modern economies: the continued consolidation of working from home. Since the COVID pandemic, we have seen a dramatic shift towards remote working in many major cities around the world. In contrast, people living in small towns seem to have mostly returned to work at their workplaces. The implications for worker productivity, travel patterns, house prices, amenities and the environment are significant.
Will these trends continue? Will remote work gaps between cities be closed? Probably not. Travel patterns in 2023 were already relatively stable, and they are expected to continue at similar levels across all cities in 2024.
What we might start to feel are the productivity changes that come with it. Although, in the short to medium term, productivity levels may not be greatly affected, or even benefit, from remote work, the long-term impact of remote work on productivity growth could be quite important. The benefits of personal interactions between workers, when they meet in the office or in city centers, have been diminished. Their value is the cornerstone of the value of cities and the reason why businesses are willing to pay higher rents to locate in city centers. Once individuals work remotely, not only do businesses leave city centers, but these valuable interactions are lost. Eventually, we should start to see these effects reflected in lackluster productivity growth. 2024 could be the year we start to feel these effects. Of course, it will be difficult to separate these from the positive effects of automated innovations due to new general-purpose technology from AI.
Albert Saiz, Daniel Rose Associate Professor of Urban Economics and Real Estate and Director of the Urban Economics Laboratory, Massachusetts Institute of Technology
Although some countries, such as China, will continue to experience house price deflation, the issue of affordability will remain a top priority for economic policies elsewhere. Housing is the non-tradable good par excellence and occupies an important place in family budgets. The factors that have driven up house prices and rents will persist in 2024: lack of productivity growth in the construction sector, a slowdown in the inflation rate of tradables, increased opposition to NIMBY , local anti-development policies, the concentration of demand in popular cities and a resurgence in the availability of financial capital.
The good news is that anti-offer denial appears to be on the decline. There is growing awareness of the need to develop more housing in response to local affordability crises. Yet rational policymakers still have work to do if they are to counter the resurgence of populist shortcuts. Fortunately, housing policies based on activating land for new construction can garner support across the political spectrum. On the one hand, economic policies focused on housing supply argue for affordable housing against established incumbents – older, wealthier individuals – who attempt to limit access to new market entrants. , the youngest and the least well-off. On the other hand, these policies also curb the excessive interventionism of overly regulatory municipal governments, allowing real estate markets to fulfill their role. Presenting housing development activism as a rare multi-stakeholder issue represents both sound economics and smart politics. Making it easier to build new construction is the way to achieve more affordable housing for all, and 2024 could be an inflection point for more aggressive development efforts.
In 2024 and beyond, we will see renewed efforts applied to the optimal design of housing policies. Economists excel at criticizing bad policies, like rent controls. While these criticisms are justified, we need to spend more time developing concrete solutions for housing policymakers. In highly dense urban areas around the world, the sale of air rights by municipal governments – setting a market price for higher floor-to-surface ratios (FAR) – can make demolition of existing properties and redevelopment more attractive. of industrial wasteland, while also generating income. for infrastructure investments. In transition zones, large-scale planned developments will require a combination of financial engineering, air rights, and well-calibrated impact fees. In the suburbs, we need to find ways to partially compensate existing neighbors for the hassle of new real estate development.
Articles represent the opinions of the authors, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty.
