Trends 2016

This is a piece that the team at Davidson Investment Advisors puts together annually and is meant to provide some insight into exciting, disruptive, or otherwise new developments we anticipate being impactful to businesses, consumers and society.

Blockchain

In our 2016 Trend report discussing blockchain technology, we focused on its impact on the financial system and potential for medical records, transparent elections, and for identity validation. The last 12 months have provided countless examples where a blockchain ledger has helped alleviate the complexity of living in a modern society. Distributed ledgers, such as blockchain, allow for transparent, verifiable, public records of transactions, assets, and contracts. Blockchain could have provided immediate irrefutable elections results to remove uncertainty and the need for recounts. The technology also enables globally verifiable identification, particularly in the case of refugees who often have to flee on short notice without legal documents. And of course, bitcoin, the best-known example of blockchain often referred to as the “internet of value,” had a resurgence of interest as Chinese citizens flocked to the cryptocurrency as a means to protect their assets from a depreciating currency and circumvent capital control measures from the government.

Future applications of blockchain could help stem the tide of fake news by verifying facts on distributed ledgers (similar to how Wikipedia relies on many users to verify submitted content). Blockchain could be used to verify reviews on sites like Amazon and Yelp, or it could be used to guarantee advertisers that the clicks they receive on their Facebook page are legitimate people and not bots.

The potential uses for distributed ledger far exceed our imaginations, and we will continue to watch how this evolves.

Family 2.0

The concept of “family” is changing. Societal norms are shifting. The “nuclear family” is becoming less common. In the 2015 Ford Trend Report, they noted just 20% of U.S. households fit the conventional definition of “nuclear family” versus 40% in 1970. As a result, our communities are changing and evolving. Regardless of one’s view of these changes, they will have implications for housing, consumption, elderly care, and population growth, to name a few. Families are the basis of our societies and our economies. If the concept of “family” is changing, what bearing will those changes have on our economy in the future?

Rise of the Machines

When we first wrote about the advent of autonomous machines several years ago, we highlighted areas for investment, new capabilities, and the promise for productivity-enhancing economic gains; however, there is another perspective to consider. Over the coming decade, up to half of all manufacturing jobs may be replaced by disruptive technologies including 3D printing, autonomous machines, and factory automation. Jobs thought to be “automation proof” are also coming under fire as advances in sensors and processing allow for machines that can do much of the work of lawyers, doctors, waiters, financial advisors, farmers, journalists, and even artists. This will shift the beneficiaries of globalization away from economies that can provide cheap labor, such as emerging markets, to economies that can provide cheap capital, historically the developed countries. Advances in technology that disrupted industries in the past would often lead to new and better jobs being created to service the new technology, but we may be approaching a point where the only beneficiaries of rapid technological change are greater overall economic productivity and the owners of capital.