US Economy Enters New Supercycle: Higher Growth, Inflation, and Geopolitical Instability.

The US economy is transitioning into a new economic supercycle, characterized by higher growth, creeping inflation, and geopolitical instability. This shift marks the end of a 15-year period of weak demand and low interest rates following the Great Recession. The new era is expected to bring higher interest rates, rewarding savers and making risk-taking more expensive. Geopolitical and economic volatility are likely to generate inflationary effects, while national security concerns will increasingly influence industrial planning and supply chains.

This new supercycle has already begun to show signs of its impact, with the stock market defying traditional expectations by rising despite interest rate hikes. The economy has maintained low unemployment and solid GDP growth, confounding fears of a recession. Economists suggest that the neutral interest rate has risen above the Federal Reserve's ideal target of 2%, explaining why higher rates are not slowing growth as expected.

The implications of this new era are far-reaching. Businesses and investors will need to adapt to a changed risk landscape, where safer investments may become more attractive. Workers may benefit from a tighter labor market, while governments are likely to increase market regulation and consumer protections. Globally, the United States is expected to outperform other economies, attracting more foreign investment due to its diversity and resilience.

However, challenges remain, particularly in the realm of international trade. The ongoing technological and economic competition between the US and China is expected to create volatility, especially for less diversified economies. As the world adapts to this new economic reality, those who can adjust their strategies and expectations are most likely to thrive in the evolving landscape.

Report by Business Insider