Economic Policy

This analysis provides a comprehensive analysis of the United States economy as of November 2025, addressing the query of whether its current status is one of a "boom" or a "downslide." The principal finding is that the economy is exhibiting clear signs of downsliding in the immediate term. This assessment is substantiated by a pronounced deceleration in the labor market and a pre-emptive, counter-inflationary interest rate cut by the Federal Reserve, which has explicitly prioritized mounting employment risks over persistent inflation.   The 2025 economy is uniquely defined by the simultaneous implementation of two contradictory, multi-trillion-dollar policies. This has created a state of extreme tension and volatility:   A Contractionary Trade Shock: A new, aggressive tariff regime has been implemented, acting as a significant, broad-based tax on imported goods. This policy is demonstrably raising prices, eroding household purchasing power, and creating a drag on economic activity.   An Expansionary Fiscal Stimulus: The "One Big Beautiful Bill Act" (OBBBA) was passed, enacting a massive, deficit-financed stimulus by extending the 2017 tax cuts. This policy is designed to boost demand and investment.   The current "downsliding" dynamic is a direct result of the tariff shock's immediate contractionary impact, which has, for now, overpowered the stimulus. The Federal Reserve's October 2025 decision to cut interest rates confirms its judgment that "downside risks to employment" constitute the most immediate threat.   This analysisU.S.  forecasts a volatile and unstable path. The 2025 slowdown is expected to give way to a temporary, stimulus-fueled "sugar high" in 2026, as the OBBBA tax cuts take full effect and boost demand. This artificial boom is projected to fade quickly by 2027-2028, revealing an economy structurally strained by a gross national debt exceeding $38 trillion, a persistent $1.8 trillion annual deficit, and a deteriorating net international investment position of -$26.14 trillion. The new policy mix has locked in this structural weakness.  

As the world struggles to confront the increasingly complex social and environmental challenges, alternative socioeconomic systems and concepts such as degrowth have been regaining traction. Degrowth is an economic theory and social movement that aims to reduce environmental degradation and social inequality through reducing consumption, production and population growth. Although it can be traced back to the 1970s, the degrowth movement has since struggled to become politically acceptable despite critiques to economic growth becoming more commonplace. Still, its advocates persist in their arguments and continue to warn about the dangers of unlimited economic growth. The question is, is degrowth on the rise or will it continue to be a marginalized movement? And if so, why is it struggling to prove its validity? Finally, is there any reason to consider its proposals viable and what could be the implications of dismissing it altogether?

One of the most critical issues currently facing the Middle East is the changing composition of its demographic structure. A massive cohort of young people — known as a youth bulge — is challenging policymakers, with youth policies affecting security, education, the labour market, and welfare programs, among other areas. Given the relative stability and wealth of the Gulf states, this is an issue that is not often associated with the region. However, handling a growing young population is just as challenging in the Gulf.   The Gulf is one of the wealthiest regions worldwide; in terms of GDP per capita, it is distinctive due to its unique hydrocarbon reserves compared to a relatively small national population. Gulf states rely on oil revenue — to varying degrees — to attract private investors and provide extensive public services and subsidies to nationals. With not enough diversification in their economies, government spending in the Gulf states will continue to be a barrier to economic diversification. To sustain the high standard of living attained by Emirati and Saudi societies to the youth and the coming generations, the two countries must set strategies and plans to integrate youth while continuing to diversify their economies away from oil. This study explores the impact of the post-oil reforms and strategy on the youth, including education, employment, social contract, and identity.   The study applies Late Rentier State Theory to analyse the relationship between youth, the Emirati and Saudi states, the post-oil reforms, and their future trajectories. The analysis is guided by some of the characteristics identified by Late RST which focus on the impact of globalization, modernization policies, diversification, the state’s encouragement of entrepreneurship, and the sustainability of their strategies with regards to the extent to which they accommodate youth’s needs and account for changing societal structures and expectations.   While the study does not refute the youth bulge hypothesis, which contends that states where young adults constitute a large proportion of the population are expected to face an elevated risk of political violence and interstate conflict, widely used in the literature; it adds to it by proposing that while those risks exist, they can be alleviated under certain circumstances. Those circumstances include policies and strategies to be taken by governments that are relevant to youth needs and the surrounding environment. Namely, taking into consideration both agency and structure.   The study finds that, for the United Arab Emirates, the results of education and Emiratisation policies are likely to shape the shifting social contract between young Emiratis and the government, and could lead to a range of outcomes, from the promising- a population of empowered, educated, and skilled Emirati youth- to the stagnant- disappointed and apathetic youth persistent in their preference of the public sector- to the more worrisome- yet unlikely- active opposition by dissatisfied youth.   With regards to the Kingdom Saudi Arabia, the study finds that while the government is investing massively in educational and employment reforms, young Saudis need to adopt entrepreneurial values and work ethic to ensure the success of “Neo-Saudism". This in turn requires a certain level of responsiveness from the government and possibly more opportunities for youth to participate in decision making in the near future. The speed of change and the extent to which youth’s values and perspectives may clash with those of older generations is yet to be determined. The real challenge for Saudi decision makers and strategists will be in maintaining balance and stable relations between different societal groups.