By Alan Murray and David Meyer
January 29, 2018

Good morning.

I’ve been attending the World Economic Forum in Davos for more than two decades, and I can’t recall a time when the meeting ended with attendees as optimistic about the economic outlook as last week. Their reasons:

  • The global economy is enjoying unusual synchronicity, with every major region expanding at the same time. Even The New York Times elevated this theme to its front page this weekend.
  • With unemployment low and inflation dormant, we face the possibility of several years of “high pressure” growth, in which wages and other rewards to workers will rise, after a decade of anemia. The unusual bonuses paid by some companies to workers in the wake of the tax bill are partly an acknowledgement of that trend.
  • Trump’s hard line “America First” trade agenda was retrofitted at Davos into a more reasonable “America First, but not America alone.” It remains to be seen what that means in practice—as The Wall Street Journal’s Greg Ip wrote this weekend—but the cooler rhetoric has reduced fears of a trade fiasco.
  • The rapid advance of technology—and, in particular, the increasing ability to take proliferating pools of digital data and turn them into useful intelligence (AI)—carries the promise of a sea change in business productivity, as well as potential solutions to a host of difficult social problems. U.K. Chancellor Philip Hammond said in Davos that AI could “double the rate of economic growth in advanced economies by 2035.”
  • A new generation of global business leaders are rethinking their companies’ obligations to society—a healthy development fueled by rising populism, declining trust, failing governments, and a generation of workers who want to know their employers are doing good in the world.
  • As for the U.S., it ranks as the most attractive location in the world to invest, after losing that honor to China earlier in the decade, and the new tax law makes that even more true.

None of that is to minimize the geopolitical threats facing the world, which my colleague Clay Chandler covered in Saturday’s newsletter. Nor is it to ignore the huge challenge of preparing the global workforce for the new technology world.

Still, it’s worth savoring the moment. All may not be right with the world. But all is not bad. Indeed, the main negative economic sentiment heard in Davos was that with all the good news, complacency may set in. As Larry Summers wrote last week—in a column that compared the current economy to the 1990s and to 2006—“The only thing we have to fear is the lack of fear itself.”

More news below.

Alan Murray


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