A reporter called yesterday, wanting to speak about the “Obama economy.” One of the questions: “what will really happen with the potential economic stimulus package?” Here’s how I took on the question:
- Infrastructure: there is no doubt that there will be a significant national economic stimulus around federal state and municipal infrastructure spending. A key point to note is that we’re entering the era of ‘smart infrastructure’ ; for example, forthcoming roadworks projects will involve the implementation of a great deal of smart-highway technology, the development of which has been proceeding at a furious pace through the last few years. Similarly, rapid advancement in construction methodologies, particularly green-design concepts and energy management, mean a more sophisticated infrastructure spend.
- Health care: the ramp up in spending as boomers impact the system is staggering, and this will perversely drive job growth at the same time it strains the budget: health care spending could equal 60% of GDP in some states within 10 years. Such stark realities are driving furious rates of business model, technological, structural and other innovations in healthcare, much of which were the focus of my keynote at the 4th Annual World Healthcare Innovation & Technology conference in DC last month. Such innovations and the necessity to fix a system in distress will drive a big variety of growth oriented markets/companies.
- Environment: despite the slowdown, there is no pullback in major efforts to deal with challenging issues, all of which are driving this forward as a growth market. MacDonald’s is investing in a new company wide intelligent energy infrastructure management system, as a way of dealing with a $1 billion energy spend. They expect to reduce overall costs by 20%. WalMart has established an audacious goal to do away with all packaging materials by 2020, if not sooner; this is driving furious rates of innovation within manufacturing at packaged goods, consumer goods and elsewhere. There are countless similar initiatives, driven by the green-agenda, or driven by cost savings. The latter has taken on more urgency in the last few months; but the key trend continues to be that green-spending will continue to grow.
- Industry reinvention: Think of efforts towards ‘Car 2.0’, which involves a fundamental reinvention of current transportation mindsets. There is a strong belief that we will see a reinvention of the auto industry as the restructuring occurs; particularly as Silicon Valley begins to laser-aim its focus at the next generation of business model. Other manufacturing industries will undergo a similar transformative shift as to structure, methodology and focus.
- Insourcing: there is likely to be growth in other sectors of the American economy as a small percentage of overseas manufacturing is pulled back, due to American economic desire (i.e. increased American protectionism) as well as an increase in overseas risk. (Security issues, national stability (i.e. Thailand) and other factors.) In addition, fundamental change to health care costs/pension costs will result in a lower labor cost in the US, compared to the cost of overseas labor + risk.
- The ‘Change Agenda’ of Gen-Y: this entrepreneurial generation will use the full force of their connectivity-oriented lives, during the next decade, to completely reshape the fundamentals of every industry — which will drive economic growth. They are technology aggressive, and will provide for significant transformation of business models, whether it be health care, insurance, financial services or manufacturing. I am doing a session for an insurance group in a number of weeks; we are focused on the dramatic impact that this group is set to have on the insurance industry. We can see a significant seismic shift in every other industry.
All in all, my view is that beyond a 3 to 6 month horizon, we start to see and realize areas of economic growth. I wrote about this in my “Where’s the Growth” trends perspective last year; I still cannot argue with any of the trends identified in that document.