24 Trends That Will Shape the World in 2024
The landscape shows a shift toward AI integration in everyday tasks and a decrease in consumer spending because of rising unemployment and restrained wage growth. Here's what else CEOs should know.
EXPERT OPINION BY MARC EMMER, STRATEGY AND STRATEGIC PLANNING EXPERT@MARCEMMER
As management teams transition into 2024, their strategic plans will need to adapt to the trends ahead:
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Democratized AI
While ChatGPT monopolized the headlines in 2023, 2024 marks the year of artificial intelligence replacing routine tasks. There are many "AI as a Service" applications.
Perhaps the most accessible will be Copilot, which will be embedded into the Microsoft Office suite, and Google's Bard, suffering from slow adoption even though it's integrated into the Google platform.
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Waning consumer demand
The recession is canceled. However, it's expected that lower employment, the stress of student loan payments, and higher interest rates will dramatically reduce discretionary spending for things such as travel, furniture, and new automobiles.
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Higher unemployment
The Congressional Budget Office predicts that in 2024 unemployment will rise to 4.7 percent. Perhaps the most important variable to watch closely is the monthly job report. Net jobs continued to increase throughout 2023 (counter to economist estimates). Once these numbers turn negative, the unemployment rate will rise.
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Wage rationalization
Through October, ADP numbers reveal that wages still rose 5.7 percent. Wage inflation has cooled over several months, suggesting workers have fewer options to change jobs, and lower inflation will lead to more rational wage increases.
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AI wage inequality
Contrary to public opinion, history has not proven that new technologies eliminate jobs. What has been evident in the past is the deterioration of wages of unskilled workers (an economic theory known as Engle's Pause). Low-income workers will be marginalized by the adoption of AI.
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AI killer apps
AI as a service is also enabling the creation of all types of applications such as billing automation, recruiting, and inventory management.
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Moderating treasuries
The Congressional Budget Office projects the 10-year T-bill will stabilize at around 4 percent in 2024, after peaking at 5 percent in late October. While the true cost of money is set by the market (the Fed only sets "targets"), mortgage rates and auto loans should normalize around 0.5 percent lower than they are today.
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A new energy ecosystem
On the heels of the COP28 Summit, countries and businesses are coming to grips with the reality that they are well behind the milestones of the Paris Accord on climate change. The promise of net zero is spreading from large companies to their suppliers.
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Elements in demand
Lithium, copper, and nickel are new currencies that will fuel a revolution including the adoption of EVs, which, for the first time in 2024 will become mainstream--reaching around 18 percent of volume in the U.S.
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Normalized inflation
Most economists are suggesting we will settle into a new normal with inflation higher than it has been in the last decade, but lower than this year. However, even a 2.5 percent inflation rate will hurt, when coupled with the 7 percent increase in CPI from 2021 to 2022.
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Congressional stall on debt
Congress is in a pickle on debt, incapable of raising revenue or cutting spending fast enough. We don't see any long-term agreement before the Presidential election, and periodic government shutdowns feel probable.
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No letup in healthcare costs
Mercer projects a 5.4 percent increase in healthcare costs in 2024, but only because employers will make modest cuts in benefits.
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Aging of America
In 2024, over 60 million Americans will be over 65 years old, putting pressure on the U.S. retirement system.
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Not-so-affordable housing
As of August, the average home price was $407,000. With escalating mortgage rates, one recent study found the average mortgage payment to be "unaffordable" for 99 percent of Americans.
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Large-scale weather events
There have been more than twenty billion-dollar weather events in 2024.
With El Niño conditions in the Northern Hemisphere, companies are bottoming up their disaster recovery plans.
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Clean hydrogen
Hydrogen burst on the scene as the hot renewable. While historically sourced from coal and natural gas, new technologies are enabling capture from solar and wind.
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The drones are here
Commercial applications for drones are expanding quickly and being used for rapid roof assessments, monitoring crops, and creating 3D images for real estate.
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New wearables
Augmented and virtual reality are in a resurgence with new products from Meta and Apple.
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Infrastructure spending
Money from the Bipartisan Infrastructure Law is hitting the street, and can be tracked on the Maps of Progress.
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ESG
Companies are folding their sustainability and equity/inclusion practices under the broader definition of ESG (environmental, social and governance) practices. Many are assigning a czar--some at the board level.
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Got cyber coverage?
According to RSM, 20 percent of small and medium-sized businesses suffered a cyber-attack last year, and 68 percent carry cyber insurance.
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China decoupling...sort of
While Biden and Xi talked a good game at their recent Summit, the world has split in two. Meanwhile, U.S. imports from China in 2022 were roughly the same as in 2018, with categories facing tariffs roughly 25 percent lower, and those not facing tariffs 40% higher.
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Presidential election
In case you haven't noticed, 2024 will be an election year. While it's early to pontificate, a Republican presidential victory could have a profound impact on all the other trends. Businesses will need to be prepared should there be more social strife and protests.
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Expansion of the military complex
Regardless of who wins the election, there is already movement toward higher military spending to support regional conflicts around the world.
Photo Credit: Getty Images.