Investing.com

The 2020s kicked off with a global pandemic that forced billions into lockdown and led to heavy government stimulus measures.

This resulted in a boom in economic growth, inflation surge, and rising interest rates amidst renewed global violence and the advent of artificial intelligence.

As reported by analysts at Bank of America, this culminated in:
– 563 rate hikes
– $7 trillion in quantitative tightening
– $11 trillion cumulative US deficit
– $36 trillion national debt
– $1.2 trillion in annual US interest payments in the decade’s first half.

The analysts noted a significant change in asset prices, attributed to an inflection in bond yields after their pandemic-era drop. This uptick in benchmark 10-year US Treasury yields has caused frequent cycles of asset booms and busts, predominantly leaning towards booms.

“Ultimately, macro has dominated over the past five years,” the analysts stated. However, they predict that an “era of micro” is about to begin, believing that micro themes will surpass macro in importance in the next five years.

These themes include:
– Technological transformation amid populism
– AI-related resource bottlenecks
– Generational shifts in power and wealth
– A return to government fiscal discipline

The shift towards micro trends will be driven by rapid technological disruption, boosted by AI adoption in businesses and societies. Productivity growth must increase to support soaring tech sector valuations. Meanwhile, AI demands extensive resources and infrastructure.

But the timing is critical; with record government debt, populist policies may focus on controlling inflation and reviving stagnant growth in Europe. Analysts foresee potential backlashes against AI’s disruptive impacts over the decade.

Generation Z, or “Zoomers,” will play a significant role in shaping governmental responses to AI’s effect on society and labor markets, as well as managing government debt.