Part IV: Felix Zulauf – What’s going to happen?

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The demographic trends in the OECD-member countries plus China, Brazil and Russia, age group of 0-64 year-olds, has gone from gaining 25 million every year from the 1950s to the early 1990s, to gaining 14 million in 2008 (the last time we had a crisis), to zero growth in 2018 and this year it will be negative at -1.7 million. It then declines to -12 million (estimate) by the year 2030 and stays there until the early 2040s.

The demographic picture is negative. Since growth in economies (“GDP”) equals Population Growth times Productivity, the negative population growth means the overall growth picture is not strong.
Since our economic system is built on growth, we need growth for the system to survive. Especially given the high level of indebtedness.
So, when the pie doesn’t grow much, all of a sudden you have to fight for market share, and that’s what comes up in trade wars, currency manipulation and protectionism.
Then we come to the business cycle – it’s late cycle and slowing. I saw the slowdown coming in late 2017 and put out in my publication to my clients an expected slowdown into the second half of 2019. And we are pretty much on track.
The tariff and trade problems are just compounding the slowdown we are seeing.

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