Archive for January 2017

USA economy can only grow now

January 15, 2017

made-in-usaNow it is a good time to review how things have evolved. The US economy has been growing since 2008 and there is no sign that the speed would halt during 2017. The unemployment is on a historically low level at 4,9%. The baby boomers are retiring and more young adults are studying than in the past, so I don’t see this as a problem for the USA. There are more vacant jobs everywhere now. Some improvement is certainly needed for those who would like to work but are not looking for a job, and the labor force participation degree is thereby low. In my expectation I see a shortage of qualified employees to remain and even getting stronger what should actually lead to higher salaries and at the end to inflation, too.

The USA presidential election resulted in a situation that has brought the stock market up and made the dollar stronger. The former benefited investors, however, the latter one makes US exports more difficult unless the hit is eaten up by lower profits from overseas. For the rest of the US economy it means higher purchasing power that feels good and pushed against the inflation. This is a very interesting situation, and when the intention of the President elect is to force or at least target more factory jobs to remain and return to the USA, the employment market just improves over he coming years.  The shortage of skilled workers and even white collar employees is evident. This will on the other hand help young adults to enter the working labor force, what gives hope to many.

Now we land to my favorite topic: Manufacturing in he USA. The trend of returning manufacturing jobs from overseas is getting stronger, and it will get intensified by the actions the President elect will do. This leads to a re-birth of manufacturing in the USA and communities that start to thrive again. It is almost written into stars that the government will find a way to force foreign entities of US corporations to return their earnings from overseas, and this will happen through tax laws. When jobs are returning for the middle class and some income gets repatriated from overseas, the US economy will get a booster I have predicted for many years now – new infrastructure, new jobs and higher tax income, and a wealthier and healthier society.

What I still miss, is the weakening dollar. Unfortunately, I might have to wait longer then a stronger economy usually improves the value of dollar. The independence of foreign oil and gas gives US a huge economic play field and strength that most of the nations of this world don’t have. The steadily increasing military build up globally will boost US economy on that front, too. Then there is the growing healthcare sector, life sciences, high tech incl. robotics and nanotechnology, online world, herbal/botanical sector, and aerospace industry etc. Even in a case the gl0bal free trade would see some limitations, the US economy will grow. The population growth is also an advantage for the USA as well.

What could go wrong? There are risks that are obvious: stock market and housing market crash in China, a deeper trade war between EU and the USA and or between USA and China, non-ratification of EU-USA free trade agreement, Canada and Mexico tightening economies with the EU against the USA etc. There there are risks of terror attacks and even wars in Europe with Russia and China in Asia. What happens with North-Korea and will it lead to a military confrontation. Will Russia start using nuclear weapons in middle range missiles and deploy them in Europe? Will EU build up the military to match with Russia or even on the long run with the USA? And last but not least: the nature catastrophes might have more influence than the man – rising sea level, tsunamis, earth quakes, meteorite hit, vulcan eruptions, hurricanes, tornadoes, massive snow falls or rains etc. One doesn’t have to be a prophet to make a statement that something of these will hit for sure. Then it is only a question of the strength. Whatever it is, the USA is in a quite good position to overcome the obstacle, but certainly more preparation is needed on state, city and district level. Let’s grow in 2017!

 

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