• Digital currencies (also called virtual currencies or cryptocurrencies) are growing explosively. In Sweden, for instance, the use of cash has fallen rapidly.3

• After years of minimal inflation, U.S. manufacturers and food companies are facing rising material and ingredient costs as robust global economic growth stimulates demand.4

• Europe’s economic recovery is being stifled by “zombie companies”—companies that are being kept afloat by cash/credit infusions from banks and shareholders despite the fact that they have not turned a profit in years. The result: thriving businesses cannot get needed capital to grow.5

• Climate change is reshaping supply networks, manufacturing processes, resource availability, and even workspace design.

• Entry-level jobs now are more “thinking” oriented and include more sophisticated responsibilities, reinforcing our emphasis on employability skills such as critical thinking, creative problem solving, and knowledge application and analysis.

After several years in crisis mode, the U.S. economy and other global economies seem to have turned the corner. However, it’s not now, nor will it ever be, smooth sailing in the economic arena for managers. After all, when you’re dealing with important factors such as jobs, incomes, prices of natural resources and consumer goods, stock market valuations, and business cycle stages, managers have to pay attention to those that could constrain organizational decisions and actions. Here’s a quick overview of some of the more interesting characteristics of today’s economy that have the potential to influence a manager’s planning, organizing, leading, and controlling:

• The slowdown in productivity has moderated globally although it continues to lag in the United States. Productivity (how much a worker produces in a hour) is an important measure of how well an economy is doing. Factors that affect productivity include types and pace of innovation, changes in work practices, technology, levels of workforce education/training/skill, etc.6

• Global trade grew strongly from the late 1970s through 2008, when it collapsed during the last global recession. However, recent indicators show global trade inching up, with the strongest growth in Europe and Asia.7

• Total U.S. employment is up. The 4.1 percent unemployment rate has held steady and is at the lowest level in years.8 Workers are benefiting from broad-based gains in income and employment for over a decade.9

• Many U.S. workers, while employed in a steady job, may not have a reliable income. Why? By using flexible work schedules, businesses are exerting more control over employees’ work hours, leading to more volatile paychecks.10

• Many businesses in low-wage industries (restaurants, retail, warehousing, and other services) are using part-time workers to soften the impact of health-care law mandates.11

• According to a Pew Research Center poll, only 17 percent of Americans believe the American dream—work hard and you can achieve success and riches—is out of reach. By race/ethnicity, the number who say it’s out of reach is 15 percent of whites, 19 percent of blacks, and 17 percent of Hispanics.12

Despite these numbers, the World Economic Forum has identified a significant risk facing business leaders and policy makers over the next decade: “severe income disparity.”13 Let’s briefly look at this issue to show that managers are constrained not just by the actual economic numbers, but also by societal attitudes about the economy.

A Harris Interactive Poll found that only 10 percent of adults think that economic inequality is “not a problem at all.” Most survey respondents believed that it is either a major problem (57 percent) or a minor problem (23 percent).14 Why has this issue become so sensitive? After all, individuals who worked hard, took risks, and were rewarded because of their hard work or creativity have long been admired. And yes, an income gap has always existed. In the United States, that gap between the rich and the rest has been much wider than in other developed nations for decades and was accepted as part of our country’s values and way of doing things. However, our acceptance of an ever-increasing income gap may be diminishing.15 As economic growth languished and sputtered, and as people’s belief that anyone could grab hold of an opportunity and have a decent shot at prosperity wavered, social discontent over growing income gaps increased. The bottom line is that business leaders need to recognize how societal attitudes in the economic context also may create constraints as they make decisions and manage their businesses.

Lastly, in this section on the economy, we want to take a look at an interesting phenomenon taking place in the United States and around the globe—the sharing economy.

Have you heard of Airbnb, Uber, Mobike, DogVacay, TaskRabbit, or Zipcar? These are just a few of the companies—maybe you’ve used one—that are part of what is called the “sharing economy.” What is the sharing economy? It’s an economic environment in which asset owners share with other individuals through a peer-to-peer service, for a fee, their underutilized physical assets (such as a home, car, clothing, tools, or other physical assets). Some analysts have included the sharing of knowledge, expertise, skills, or time, as well.16 The concept behind the sharing economy is putting underutilized assets to good use. Asset owners “rent out” assets they’re not using to consumers who need those assets but who don’t want to, or who can’t afford to, purchase them. As the sharing economy has grown, other terms—such as collaborative economy, on-demand economy, gig economy, freelance economy, peer economy, access economy, crowd economy, digital economy, and platform economy—have been used to better describe the various iterations of sharing that take place.17 Even some economics experts have said that these arrangements aren’t really “sharing” but are better described as market-mediated since there’s a service or company that mediates the exchange between consumers. They suggest that the arrangement is more like an “access economy” because what consumers are looking for is convenient access to assets they need but don’t have, and they’re not concerned with developing a business or social relationship with the asset owner.18 Whatever form or definition it takes, these new-economy platforms are likely to remain an important part of our global economic system.

The other external component we want to specifically look at is demographics. Why? Changes and trends in this component tend to be closely linked to the workplace and managing.