Economic Resilience: Sept 11 Then vs Now
Twenty-five years ago today the United States entered the 9/11 era that in many ways has been reshaping the world ever since. My family and friends have been reflecting on where we were when it happened, and sharing memories with the younger generation who weren't even born in 2001.
It is useful to compare the economic strength then vs now. In 2001 the nation was coming out of the dot.com bubble but also possessed considerably more fiscal room to respond to shocks like the terrible events of 9/11. Consider these differences:
- Federal debt held by the public in 2001 was approximately one-third of GDP, compared with nearly 100% today, according to Federal Reserve economic data.
- Healthcare spending was 1.4Trillion - about 14% of GDP, compared to $5.7T today, about 18.4% of GDP.
In 2001 the US had a shock absorbing ability that it may not have now.
National resilience depends on more than the strength of financial markets, corporate earnings or headline GDP.
It also depends on the reserves held across society—the savings, income stability, affordable necessities and access to credit that allow households, businesses and government to absorb a sudden shock.
The latest edition of the S3T Economic Experience Dashboard is now available for paid membership with updated data for Q3. This latest edition reveals a concern that speaks directly to national resilience:
The portion of the US population experiencing moderate to severe financial distress has risen sharply since Q4 2025 when the Economic Experience Dashboard was first launched.
43% of the American population are facing moderate or severe financial distress - meaning they must make frequent tradeoffs and rely on debt (moderate), or they are behind in their bills and have persistent budget shortfalls (severe).
Risk of Wall Street Recession vs Main Street Depression
While the past week's stronger than expected jobs report is welcome assurance that the risk of recession is moderating, it does not improve the economic challenges faced by increasing numbers of Americans.
US total household debt currently sits at $18.8 Trillion - note that this is $3T higher than total income of US individuals at $15.2T. In other words, American households collectively owe roughly $1.24 for every $1 of annual household income.
At this point nearly 60% of U.S. households are unable to afford a $300K home. This is significantly lower than the median home price which is currently pegged at $459,826.
In addition, MLS and Redfin data show that the number of home buyers has actually been declining since 2013 - aside from a bounce in 2021-2022. Increasing numbers of sellers cannot find buyers.
To put all of this in perspective, consider the imbalance in spending power - and how it is set to progress over the foreseeable horizon. The chart below shows consumer spending, categorized by core consumers vs affluent consumers.
The chart shows just how much of consumer spending now depends on a relatively small population of consumers. 83% of consumer spending comes from affluent consumers. Note that between now and 2036 that ratio will only worsen: 87% of spend will be from affluent consumers.
AI drives another shift: the education premium falls (again)
A growing chorus is noticing that the college degree premium is falling consistently year after year now. Stepping back to look thru a wider lens - the crisis has been building for some time now. As noted in this recommended read: The multiversity is finished, the definition of what makes a good education is evolving, perhaps faster than academia can process.
The very clear historic pattern shared in the first link above:
- In a given period of time, there is a dominant technology construct (the way work gets done)
- This dominant technology construct requires a specific kind of skill and education.
- Those who have that education, are differentiated from those who don't, and enjoy a wage premium.
- This continues until the majority of the population have that level of education. After that, the wage premium erodes.
We are now entering a era with a new and very different technology construct - driven by AI. In this era, workers will be doing work very differently. They will be interacting with or designing artificial intelligence driven automation tools or agents to get the work done. These agents will become more and more capable. with the rogue agents that can’t seem to get control over
If you have a group of AI Agents working at your direction - what is the optimal management science for getting the most value from them?
There is a crucial opportunity here for talent teams and educational institutions to rethink both education and work.
Keep learning with S3T Playbooks
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- Flipping the Script: Understanding and Changing Internal & Macro Narratives
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- Addressing issues related to uneven accountability
- Validating AI use cases
- 6 Proven Ways to Resolve Conflicts
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