Posted tagged ‘Growth’

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!

 

A way out

November 2, 2011

When looking at all the reports about economic troubles around the world there are some very important ones that haven’t gained enough weight in my opinion. Boston Consulting Group reports that increasing cost level in many places – especially China – pushes US corporations to move back to the USA with their manufacturing. This is by the way a wish of President Obama and something GE’s Jeff Immelt has proclaimed in his favorite speech a couple of years back. Not to mention how I have predicted and demanded this as the only true source of recovery for the US economy. We talk about millions of new jobs in the USA but also about billions of dollars to be invested in facilities and capital goods! This would be welcome then the recovery now is slow with growth rate at around 1-2% on quarterly basis, which keeps people (with 9-10% unemployment versus 140 million people employed) at home and not consuming and therefore also not buying homes etc. So, the mid-term future looks bright and can be rated as a green light!

The energy question has turned into USA’s favor as well then besides finding new oil wells in the USA there are now the largest natural gas reserves in the whole world! When we look at the US oil, gas, wind, water, and wave energy sources and reserves we can easily see that the nation can be self-sustained for hundreds of years to come. When improving the energy efficiency in all industries and residential area those reserves will last even longer! This turns also the green light on!

Then there is this Occupy Wall Street – I regard this just a normal phenomenon then when comparing the US system with the Nordic ones in Sweden, Norway, Denmark and Finland, it is pretty much easy to come to conclusion that some changes are needed in the USA. That would not mean any socialism or communism but just a very common social market economy with the basic idea that every human being is valuable and need to have the same opportunity to prosper in life. That means also that higher tax rates will come. It is obvious that it cannot be good or even right, if there is a 1% minority having 90% of nations wealth. I regard this discussion necessary and normal and hope for a positive outcome. Therefore I rate this as a yellow light.

Then there is my hopes and dreams section. If the US, Mexico and Canada (NAFTA) and the EU would work more towards a free and open, and even “common” transatlantic trade zone, what could beat that? Nothing! Low cost labor is available in the East-European countries and Mexico as well as in Southern US States (minimum wage only 10 USD per hour). The highest technology and leading companies are located in these areas. The best schools and universities are also located in this zone. The EU has already a free trade agreement with Mexico and I expect it to get it soon with Canada, but when is the free trade reality between the EU and the USA? That is why I rate this also as a yellow light. For example Mr. Simo Karetie from Central Association of Finnish Industry is favoring this in Prima magazines issue nr. 5 page 10.

The financial crises in some European countries shows only the need for a stronger common fiscal policy and integration. That is not good for all European nations, and therefore each nation should consider whether to be just an economic ally (European Trade Zone) or integrated political wheel in the whole (Member state). I rate this also as a yellow light, and don’t see a real danger here for the world economy.

My last hope is that the growth will be put back into economic policy targets in everywhere, but under the consideration of well-being of citizens and nature.

The balance is now 2 greens and three yellows and no reds. It looks promising!