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Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More »

By No Means is it the Same Old World (Part 2)

May 5th, 2016 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

Part 1 of this Economy at a Glance introduced the topic of a dozen major ways in which the structure of society and the framework of the global economy are changing beyond what humankind has ever experienced before.

In Part 2, let’s dive right in with transition number (4), which will then lead organically into (5) and beyond.

(4) Rock star central bankers: Given that establishment politicians have been passing out of favor, maybe it’s just as well that central bank Chairmen and Governors have stepped into the spotlight.

Changes to taxation, spending and other fiscal tools to guide the economy have fallen out of favor and almost the whole responsibility for managing output, employment and other prosperity  indicators has fallen on each nation’s central bank.

How long will this go on? In most countries, there is no apparent end in sight. (Canada, where debt is being piled on to finance infrastructure projects, is an exception.)

At least, thanks to central bankers’ attaining semi-celebrity status, many among the general public have now been introduced to another hierarchy of leadership.

The names of Janet Yellen (Federal Reserve), Mario Draghi (European Central Bank), Mark Carney (Bank of England), Haruhiko Kuroda (Bank of Japan) and Stephen Poloz (Bank of Canada) are often spoken of as reverentially as their corresponding Presidents or Prime Ministers.

Inflation continues lower than desirable and the ‘threat’ of deflation persists. Some nations are now stuck with negative interest rates. Nobody is sure what the eventual repercussions of negative yields will be. Lying so far outside the norm, they’re a source of anxiety all on their own, probably undoing whatever good might otherwise come from their implementation.

Interest rate policy inevitably has an influence on capital investment strategy. Combined with the degree to which domestic yields can sway the value of a nation’s currency, thereby attracting or repelling foreign capital, the construction shock waves can be dramatic.

(5) A cashless society: Maybe the shift to a cashless society will be similar to the earlier supposed move to a paperless world. With respect to the latter, e-mail, text messaging and social media have certainly cut into the circulation of paper, but it is has far from disappeared.

PayPal, Apple Pay and other digital payment systems are changing the way we handle our finances. Sweden is said to be in the forefront of this trend. In that nation, so it has been reported, even homeless street people who are seeking handouts carry credit and debit card readers.

I can’t help but wonder if that’s an example of an urban myth, but it’s a tale too compelling not to pass along. It’s one of those stories that begs to be believed, even if it isn’t entirely true.

In any event, a prime advantage of doing all financial transactions electronically is the creation of a clearly visible documentation trail. This will supposedly discourage crime, since law enforcement agencies will have a heightened ability to back-trace transactions.

Besides, there’ll be no more masked bandits charging into banks and demanding everyone prostrate themselves face down on the floor.

Frankly, I’m not so sure about that argument. In the movies, the biggest heists, involving billions of dollars, are perpetrated with the touch of a finger to a hand-held or laptop keyboard that sends funds scurrying to tax-free havens around the world. Although let’s also recognize that international efforts are underway to reduce the presence of such shady harbors.

(6) Downloads and data streaming: Standard programming on network television is no longer the force it used to be. If you and your family have favorite shows you like to watch, their number of episodes has become less and where they appear in the schedule more volatile.

They’re likely to be pre-empted at a moment’s notice, or disappear into a long inexplicable hiatus, while you’re left to wonder – with diminishing interest as each week passes – how the latest cliff-hanger ending will be resolved.

Most of us are now satisfying our viewing pleasure through downloads (e.g., Apple TV) and/or data streaming (Netflix). We’re willing to pay for the convenience and the expanded variety.

We’ve discovered that binge-watching episodes in rapid-fire sequence is a very pleasant way to pass a workday evening or a laid-back Sunday afternoon (i.e., when NFL football is not on.).

But here’s the more important question. Do you truly know what you’re kids are watching?

If you’ve let your ‘hip’ quotient lapse, then you won’t know that YouTube is way bigger than you suppose. To me, YouTube has always been a novelty viewing option, filled with music videos or quirky bits of reality comedy – think kittens ‘acting’ cute −  that only occasionally hold my interest.

There are also ’10 Best’ and ’10 Worst’ lists that dissect movies and celebrities and their concerts and romances. Plus snippets of ‘talk shows’ featuring ‘lip synch battles’.

But those don’t begin to scratch the surface. Sit down with your kids and ask them what they’re viewing. What ‘channels’ they’re turning to?

YouTube has a constellation of ‘stars’ unknown to most adults.  They may even be school mates of your sons and daughters, with their own channels, where they tell jokes about their families and buddies, perform rap songs or otherwise try to entice hordes to sign on as ‘subscribers’.

If you want to tackle more serious subject matter, there are ‘how-to’ shows. How to build a shed; lay interlocking brick; or hang drywall.

As for how else this is relevant for the construction industry, keypunch in a search for ‘Chinese bridge building machine’ on YouTube and prepare to be impressed and amazed.

And to wonder why such a grandiose idea never crossed your inside-the-box mind. Or mine.

(7) VR and AI:  For convenience, and to keep my ‘transitions’ list within reasonable bounds, I’m lumping virtual reality (VR) together with artificial intelligence (AI).

There are YouTube celebrities who play and review the games that their contemporaries are buying. They appear in a corner of the screen while what they’re seeing through their headsets occupies most of the video area. Horror shows feature best! If you’re not too scared, it makes you want to rush out and buy an Oculus.

USA Today, with its latest ‘app’ update has included a 360o viewing icon for nature and other shots. It offers a different version of virtual reality. As you move your iPad screen, the picture you’re seeing alters accordingly. It’s like looking out a window that pans up and down and from side to side.

The design professions are quickly embracing the potential of VR. As a shortcut to spotting assembly problems, it’s a tremendous aid in speeding up construction schedules.

Personally, I especially like the notion of eventually being able to travel ‘virtually’ anywhere in the world to see the sights. As appealing as VR visitations may be, however, they’re not likely to temper the need for new airport passenger terminals and runways. Air business and tourism travel is expected to climb exponentially around the globe over the coming decades.

I’ve been noticing how some firms, in their advertising, are beginning to refer to our new ‘apps’ age. Perhaps that’s what I should have called transition (7) instead.

Plus there are important offshoots of VR and AI. For example, aerial drones certainly warrant mention.

Real estate developers, vying for condo buyers, are able to show potential clients the exact view out the picture window of the unit they are considering purchasing through the use of aerial drones.

Vineyards in California now have the legal right to employ drones for ‘crop dusting’.

Their use to monitor oil pipelines for signs of leakage is an obvious plus. As are the advantages inherent in keeping tabs on remote land claims, as can be critically important in the exploration and extraction business.

Thus ends Part 2. Part 3 will close this Economy at a Glance with commentary on the final five major transitions.

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Category: CMD Group

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