Global Economic Effects of America's Fourth Turning

By Annika Jain

The internal crisis unfolding in the United States, as described by Strauss and Howe’s Fourth Turning theory, is likely to influence not only domestic institutions but also global economic stability. Given the United States’ central role in international finance and trade, disruptions within its political and institutional framework can have spillover effects across markets and regions.

Political instability within the United States introduces a layer of uncertainty that affects investor confidence. The United States has long been regarded as a source of economic predictability, in part due to its stable institutions and rule-based governance. However, events such as the January 6, 2021 Capitol riot, repeated confrontations over the debt ceiling, and polarized elections have raised questions about the strength of U.S. democracy (Friedman, 2021). Markets tend to react cautiously to such developments, particularly when they involve questions about the state’s ability to meet financial obligations or pass essential legislation.

Economic policy decisions made under pressure during a period of crisis can also have global consequences. During the 2008 financial crisis and the COVID-19 pandemic, the U.S. government used large fiscal packages and the Federal Reserve introduced prolonged low interest rates. These measures helped stabilize the domestic economy, but they also created global ripple effects, especially in emerging markets with debt denominated in U.S. dollars. More recently, aggressive rate hikes by the Federal Reserve in response to inflation have led to capital outflows from developing countries and currency volatility (Reinhart & Rogoff, 2010).

Trade policy may undergo long-term shifts as well. In earlier periods of American crisis, such as the 1930s, protectionist sentiment gained influence. A similar trend has emerged in recent years, as concerns about offshoring, supply chain dependency, and economic inequality have reshaped political debate. Both Republican and Democratic administrations have expressed skepticism toward past trade frameworks. A move toward more nationalist trade policies could undermine institutions like the World Trade Organization and strain relations with key allies (Bremmer, 2020).

Geopolitical uncertainty adds to the broader risks. Previous Fourth Turnings in U.S. history have included large-scale conflicts. While a global war is not inevitable, there are signs of increasing international tension. U.S. relations with China have become more confrontational, while conflicts in Europe and the Middle East have heightened instability. In such an environment, markets tend to be more volatile, and long-term investment decisions become more difficult. The strength of existing international economic alliances may be tested if U.S. leadership appears inconsistent or inward-focused.

At the same time, systemic crises often create conditions for institutional renewal. New political coalitions, changes in technology, and shifting demographic pressures may result in updated policy frameworks both within the United States and in the global order. However, the path to such transformation is likely to involve significant disruption and reorganization.

Whether the United States ultimately emerges from this crisis with stronger institutions or continued division will shape the future direction of global markets. Given the interconnected nature of the international economy, the outcomes of this generational turning point will not remain confined to U.S. borders.

References

Bremmer, I. (2020). The Power of Crisis: How Three Threats—and Our Response—Will Change the World. Simon & Schuster.

Friedman, G. (2021). The Storm Before the Calm: America's Discord, the Coming Crisis of the 2020s, and the Triumph Beyond. Anchor Books.

Reinhart, C. M., & Rogoff, K. S. (2010). This Time Is Different: Eight Centuries of Financial Folly. Princeton University Press.