A Long-Range Economic Warning Business Leaders Should Not Ignore
Several of my clients belong to industry trade associations that retain ITR Economics as their outsourced economist. These are successful, seasoned business owners who are not easily impressed, and they speak very highly of ITR. In fact, one of them told me that advice from ITR saved his bacon in 2008.
So, me being me, I went looking for a book.
That search led me to Prosperity in the Age of Decline, published in 2014 by Brian and Alan Beaulieu, the founders of ITR Economics. For quite some time, ITR has been warning about what it calls the “Great Depression of the 2030s,” and its forecast is rooted in long-term demographic and fiscal trends they believe will put significant pressure on the U.S. economy. ITR continues to publish material advancing that outlook today. (source to be linked into post: https://blog.itreconomics.com/blog/can-the-2030s-great-depression-be-prevented)
At the heart of their argument is demographics.
We are an aging nation. Census data show that in 2020, the U.S. had 55.8 million people age 65 and older, representing 16.8 percent of the population. Census projections have also long pointed to 2030 as a turning point, when all baby boomers will be at least 65 and roughly one in five Americans will be of retirement age. That is a massive shift, and it has real implications for labor markets, entitlement programs, health care demand, tax revenues, and overall economic growth. (Source: https://www.census.gov/library/publications/2023/decennial/c2020br-07.html)
The Beaulieus also point to government debt as a major driver of concern. That issue has only become more relevant since their book was published. Treasury data show that total federal debt reached roughly $35.5 trillion by the end of fiscal 2024, and daily Treasury reporting shows debt was around $36 trillion in late 2024. Whether you are alarmed by that number or not, it is hard to argue that it is insignificant. (Source: https://fiscaldata.treasury.gov/datasets/historical-debt-outstanding/historical-debt-outstanding)
Then there is the growing pressure from Social Security and Medicare. Social Security alone cost the federal government about $1.35 trillion in 2023, making it one of the government’s largest spending categories. At the same time, the 2024 Trustees Report says the Old Age and Survivors Insurance trust fund is projected to be able to pay full scheduled benefits only until 2033, at which point continuing income would cover about 79 percent of scheduled benefits. That does not mean the system has already run out of money, but it does underscore the long-term strain that programs like this place on the federal budget. (Source: https://www.ssa.gov/oact/tr/2024/VI_C_SRfyproj.html)
All of this reminded me of something Lester Thurow once said at the Masters Forum, an executive development program I mentioned in a November 2024 post. Thurow, the well-known MIT economist, was asked, “How do you predict the future?” His answer was memorable: “I don’t predict the future. I study current existing trends, determine if they will continue, and then mathematically calculate the impact 10, 20, and 30 years from now.”
That, in essence, is what ITR claims to do.
One of the things the Beaulieus emphasize is the importance of data-driven forecasting rather than simply repeating whatever happens to be popular in the media. According to them, many widely quoted forecasts have not proven especially accurate when compared with actual outcomes. That point, by itself, is worth thinking about. We live in a world full of confident opinions, but with many fewer disciplined models.
Candidly, I found the book a bit of a struggle because of the sheer volume of data. It is not light reading. But in light of the strong endorsements I have heard from multiple clients and trade associations, I think it is worth your attention.
I am not telling you that you must agree with ITR’s conclusions. I am saying that leaders would be wise to at least be aware of them.
Too many business owners spend their time reacting to the quarter they are in. Very few spend enough time thinking carefully about the structural trends that may shape the decade ahead. Whether ITR proves exactly right or not, their work raises questions serious leaders should not ignore.
At a minimum, I would encourage you to familiarize yourself with ITR Economics and its long-range outlook. A very contrarian economic forecast exists, and it may be worth understanding before circumstances force you to.
