Conference Presentation, Panel
US Economic Competitiveness in a Changing World | Global Conference 2025
Milken InstituteStephanie Flanders, Gary Cohn, Kevin McCarthy, Peter Orszag, Ruth Porat, Glenn Youngkin
- The U.S. economy is projected to remain resilient and maintain its status as the world's reserve currency over 10 to 20-year horizons, though specific supply chains and pharmaceutical sectors will become more micro-resilient while the ability to project power and sustain current fiscal trajectories may face macro-level stress.
- Tariffs ranging from 10% to 25% or higher are expected to be implemented as negotiation tools, with plans to re-shore supply chains for critical areas like pharmaceuticals and semiconductors from China to trusted allies and the U.S., though manufacturing employment is forecast to see only marginally higher growth without returning to 1950s economic shares.
- Technology is anticipated to be the primary driver of future growth over the next three to five years, with AI potentially adding $4 trillion to U.S. GDP by 2030 if adopted holistically, alongside significant advancements in quantum computing expected within five years and a digital payment stack transformation.
- Energy policy aims to achieve dominance through regulatory cuts and permitting reform described as faster than under Reagan, including the commercial deployment of small modular reactors within two years and the unlocking of 100 gigawatts of grid capacity via optimization, aiming to lower costs and ensure reliable, clean power.
- Fiscal strategies include extending tax cuts, cutting federal agency size, and implementing a budget deal to drive massive investment, with risks noted that failure to enact structural changes could cause spending programs to double in 8 to 9 years, forcing double-digit cuts.
- Labor market expectations involve multiple pathways for workers via credentials rather than college degrees to address a labor participation rate of 63% that is below historical levels, though a shortage of electrical workers is anticipated alongside a decline in U.S. mobility rates over the past two to three decades.
- Geopolitical relations are projected to reset with China, treating it as an adversary while securing agreements with India, Japan, the UK, and neighbors Canada and Mexico, with a shift toward critical mineral independence and a TikTok ban to reduce reliance on Chinese processing.
- Significant risks include the potential loss of the U.S. technological lead in chips and frontier models if R&D funding is cut, the possibility of an entire AI ecosystem seeding growth in China, and threats to talent attraction caused by the current regulatory atmosphere.
- Private capital is expected to replace the federal government in driving R&D and capacity expansion, with major commitments such as Google's planned $75 billion capital expenditure in 2025 contingent on avoiding strict antitrust recommendations.
- Economic disruption is anticipated during the transition to a micro-resilient supply chain and re-industrialization, with some steel smelters already returning to the U.S., yet overall inflation and deficits remain concerns as interest rates are noted to be dramatically higher than a decade ago.