US (1960-2100) If Things are so Great, Why is Hardship in the US Increasing?

 

Measurable Hardship in the US (graphic above), is increasing and projected to increase until 2025. If US economic performance is so great, why is this happening? And, why does Hardship decrease after 2025 in the estimated model (see the Boiler Plate) above?

Quantitative Counterfactual Analysis indicates that impacts from growth in the World System are driving Hardship in the US. Decline in Hardship before 2025 is the effect of slowing growth in the World System. In other words, Growth in the World System has increased Hardship in the US even though the US is the Hegemonic leader of the World-System.

Part of the reason is that the current US Administration (Trump II) is cutting benefits for SNAP (Food Stamps) and other US Welfare programs. Why "millions of Americans" have to be on food assistance in the first place is a question that bothers me and the answer has to do with World-System forces.

The graphic at the beginning of this post is a forecast driven by outputs from the WL20 model. To determine the effect of World System forces, we can rerun the forecast with the BAU model (no input from the World System).

The BAU model shows Hardship reaching a high-level plateau after 2100. The Trump II Administration's actions to withdraw from the World-System and their attempts to cut US Welfare programs is an attempt to bring the Hardship Future into being. Increasing Hardship in the US was one of the prices of Hegemonic Leadership. In this regard, the peak and decline of the World System would benefit this US if it still stays connected to the World-System. High levels of Hardship and World-System isolation are possibly a benefit to some elements of the US Right-Wing elite, but not most of the US Public. The Hardship Future will likely also be one of Conflict and Chaos.

You can experiment yourself with the USL20 Hardship model here. For comparison, the System Matrices for the the USL20 Hardship model with World Input is presented in the Notes. Bootstrap 98% Confidence intervals for coefficients in the Systems Matrix (F) are provided in the code. Both models are stable.

Notes

Hardship Index

The following indicators (from Shefner,  Roland and Pasdirtz, 2015) were used to construct the HARD (Hardship) Index. All data were taken from the World Development Indicators (WDI).

In addition to HARD1, two other indexes were constructed, HARD2 (dominated by Unemployment) and HARD3 (dominated by Inflation). Each index explained another 10% (0.841% and  0.933%, respectively) in the indicators. So, indeed, Unemployment and Inflation were important components of US Hardship, but the other indicators also played a role. Whether the US Electorate made a good choice in electing the TRUMP II administration to resolve their issues with hardship will have to wait and be seen over the next four years.

The Measurement Models for the WL20 Index and the US_HARD index are presented above. The time series forecast plots are presented below. The WL20 index first:

Growth in the World System (W1) peaks in 2040 and is forecast to decline after that. The Food-Market Index (W2=(LP+P.Wheat.-TEMP) declines throughout the period because Global Temperature is increasing and the Oil- Market-Environmental Index (W3=(P.OIL+P.WHEAT-OIL-EF-Earths) increases to a plateau in 2075.

And the the WL20 HARD index:

 

Overal Hardship (W1) increases through the period while W2 (Unemployment) and W3 (Poverty) are cyclical.

World-System (1970-2100) World Population Collapse

October 27, 2025. NPR ran a segment on how Populations are Shrinking and Altering the Global Economy. It is somewhat surprising that Population Decline has not been bigger news. It has been going on in many countries and for the entire World System (graphic above with 98% bootstrap prediction intervals).

The United Nations has essentially been making Population projects (graphic above) similar to my WL20 Model at the start of this post.

The basic theoretical model underlying the possible impact of Population Decline is the Kaya Identity (above) used by the IPCC to help understand Global Temperature Change. The Kaya Identity is true by definition (see the Boiler Plate) so any decrease in Population will not only decrease economic growth (Q) but also decrease CO2 emissions and moderate Global Temperature (T).

My models are also predicting that growth in the World System will peak before 2100 (here) as will Global Temperature (here). The reasons are that there are powerful negative feedback loops from environmental and market controllers that eventually limit growth of the World System. 

Exercises

You can experiment yourself with one of my World System models here. The models are written in the R programming language and can be run on line. Suggestions in the code, to include bootstrap confidence intervals for choosing reasonable counterfactuals, can be found in the code. The model is stable and cyclical.

Another one of my World Systems models is unstable and produces exponential growth forever (here). When it is stabilized (instructions in the code) the World System reaches a steady state after 2100.

The future could be any one of these models or something else entirely (see the Boiler Plate for IPCC Emission Scenarios). You have to ask yourself which one of the models (if any) seem reasonable.

World-System (1980-2100) Will Political Instability Hurt the French Economy?

 

Recently, the NY Times reported (here) that "...after three government upheavals in France since last summer, the damage to the French economy has already been done." In this post, I will take a look at the data. Recent data on French GDP comes from the World Bank and ends in 2024. The graphic above shows French Real GDP (GDP in constant 2015 US$) with a forecast and 98% confidence intervals out to 2100. 

French GDP is forecast to grow until about 2045 and then collapse after that. 

In terms of "damage to the French economy," the 2020 COVID-19 Pandemic was a major shock (outside the lower 98% confidence interval). In 2024, French GDP was a bit above the forecast attractor path (dashed red line). Political turmoil might reasonably be expected to bring the economy back to the attractor path but not create another COVID-style shock.

Possibly the most concerning aspect of the GDP forecast is the collapse starting around 2045. Why is the French Economy forecast to be in Growth-and-Collapse mode?

If you have been following my prior postings on the French Economy (here) you will see that France is approaching a Steady State Economy (maybe).*** French GDP, on the other hand, is best predicted by the World System (see the Notes below), which is in growth-and-collapse mode (see the WL203 Model). To avoid this future, some geopolitical re-orientation** will be needed.

Looking at the AIC statistics (below). One approach would be to reorient the French Economy to Business as Usual (BAU, [16.16 <  AIC =  21.38 < 25.79]) with no external geopolitical alignments, which produces the steady-state forecast above.  Compared to the World System model (W, [-97.78 < AIC =   -46.24 < -9.145]) which has the best AIC, this will require some geopolitical work. One path would be through the Random Walk (RW, [ -67.1 <   AIC =  -56.52 < -47.09]) which has a very good  AIC but is not predictive of the future.

One charitable analysis of current French Political Instability is that it is part of a Random Walk walk process to find a different Geopolitical Alignment. There is no guarantee that the process will end in a Steady State Economy.

You can experiment with the FRL20 BAU model here and explore alternative futures.

Notes

** The New York Times also reports (here) that France's ability as a geopolitical actor has been compromised by the current Political Instability.

*** The issue surrounding unending (exponential, unstable) Economic Growth, Limits to Growth, Steady State Economies,  and Growth-and-Collapse Modes have been uncovered (again--the debate has been ongoing since the 1970s) in the 2025 Nobel Prize for Economics. Joel Mokyr, a historian and one of the recipients, argues (here) that a Steady State Economy where growth has ended is unlikely. If history is any guide, new innovations will always break the Steady State and create more opportunities for growth. However, see my discussion of French Technology Cycles here and here. Also see Joseph Schumpeter's Creative Destruction model (here). I will review all these models in a future post, but as an obvious summary: no one knows the future. I can only report on forecasts from models and wait to see what happens to the actual French Economy.

AIC Statistics

Technology Models

The Nobel Price in Economics was recently award to Phillipe Aghion, Peter Howitt and Joel Mokyr for their work on How Technology Drives Economic Growth. Reviewers have claimed that their work has relevance for current Growth Policy. For this post, I can just point out that the two technology input models, TECHE (TECH Efficiency) and TECHP (Tech Productivity) are reasonable competitors but not the best models.

An interesting point is that the Aghion-Howitt model with Creative Destruction defaults to a Random Walk (RW) with drift.

I will investigate La French TECH in a future post (here).

World-System (1970-2150) Six Futures for Colombian Growth

 

The Trump II Administration's Gunboat Diplomacy in the Caribbean  has brought Colombia into the supposed War on Narco-trafficers. The BBC Reports (here) that

Colombian President Gustavo Petro has said that a boat recently bombed by the US was "Colombian with Colombian citizens inside", an allegation the White House called "baseless".

To provide some background to Trump's legally questionable military actions in International Waters, it would seem useful to understand the Economy of Colombia and how it might be affected by possible US military action. Google AI provides the following overview:

Colombia also has an historical reputation as a Cocaine Trafficker, but the Cocaine trade has recently been disrupted as a result of domestic and global forces that are reshaping the drug industry.

My first question, in this post, is what Geopolitical Alliances would be best for Colombia and how might Trump's Drug War affect the alliances. The graphic at the beginning of this post shows six "reasonable" future alignments for Colombia (some "unreasonable" futures are discussed below). Alignment with the US is cyclical and unstable, as is alignment with Russia (RU) and just continuing Business as Usual (BAU). Focusing on Globalization (KOF) provides the most stable future and is the best model from the standpoint of the AIC (see the Notes below, [23.47 < AIC = 51.86 < 81.82). Linkage with the World System (W) generates collapse starting around 2025.

There are a number of the collapse scenarios for Colombian Geopolitical Alignment (graphic above): Emphasis on Technical Efficiency (TECHE) and linkage with China (CN), the differences being when the collapse is forecast to start.

Notes

Economy of Columbia

Columbia

Columbia IMF

Google AI on the Economy of Columbia:

ChatGPT on Columbia Globalization:

 AIC Statistics:

World-System (1960-2100) Eight Forecasts for Venezuelan Growth

 

Notes

A More Detailed Look at the Economy of Portugal

In a prior post (here), I reviewed an journalistic article from the Atlantic (here) that tried to understand the puzzle of Portugal's economy using a sampling of conventional wisdom from macroeconomic analysis. One of the articles mentioned in the piece was published by the prestigious Brookings Institution and written by Prof. Ricardo Reis of Columbia University (here). It provides a more in depth, academic, macro-economic analysis that is worth some careful reading. The graph above is taken from earlier post and annotated with various historical fictions about the economy of Portugal from A-E. I will refer to each fiction in the discussion below.

Notes

• Power Outage in Spain and Portugal

World-System (1960-2100) Venezuela Growth Forecast

Venezuela is in the news right now for a number of reasons.

Notes

Data taken from the World Development Indicators (WDI). All variables are in standard scores. The methodology used to create forecasts is similar to the one used by the Atlanta Federal Reserves GDPNow app. Prediction intervals are generated using a Bootstrap algorithm in the R programming language.

You can run the VE20 Model here.