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Thread: 10 reasons to be optimistic about the U.S. economy

  1. #1
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    Default 10 reasons to be optimistic about the U.S. economy

    http://investing.covestor.com/2013/0...mpaign=content

    -snip-
    1) Still No. 1: The U.S. is home to a $15.7 trillion economy, the world’s largest and wealthiest. That’s double the size of China’s annual economic output, 2.5 times that of Japan’s and 4.5 times that of Germany’s.

    2) Stock & Bonds: The U.S. stock market has delivered returns of 129% from March 2009 (the financial crisis nadir) through the end of 2012. American equities outperformed European stocks by 24%, Japanese equities by 97% and emerging market equities by 22% during the same period. U.S. Treasuries had a total return of 18% versus 14% for global developed economy bond markets.

    3) Land & Water: The U.S. outstrips the rest of the world (save Russia) when it comes to natural resources—energy, water, minerals and so on—on a per capita basis. America has 4.6 times more water resources and 5.3 times more arable land than China.

    4) Energy: The U.S. is on track to become the world’s biggest oil producer by 2020, ahead of Russia and Saudi Arabia, according to the International Energy Agency.

    5) Insourcing Boom: A conga line of U.S. companies—Caterpillar (CAT), Ford (F), General Electric (GE), and General Motors (GM) -- have announced plans to shift production back to the U.S. thanks to cheaper energy outlook at home. Boston Consulting Group data cited by Goldman predicts that by 2020 the re-shoring trend will add 2.5 million to 5 million jobs and as much as $55 billion in output to the domestic economy.

    6) Competitiveness: When it comes to economic freedom and ease of doing business international rankings, the U.S. scores best among big economies and in the top 5% among all countries, according to data compiled by the Investment Strategy Group, Heritage Foundation and the Wall Street Journal.

    7) Demographics: The US and India are the only two countries with a growing working age population. Japan, the Eurozone and broader Europe and Russia are heading in the opposite direction. By 2050, the US will have one of the youngest workforces worldwide with a median age of 40.

    8 Military Power: America spends $711 billion (4.5% of gdp) on defense, an amount that exceeds the next 13 countries combined. China spends $143 billion.

    9) Talent Magnet: Nearly 40% of U.S. researchers migrated from other countries, according to a 2012 National Bureau of Economic Research working paper cited by Goldman. Unlike other countries like India, the U.S. retains a bigger share of foreign researchers.

    10) R&D Powerhouse: The U.S. generated about 31% of global R&D expenditures in 2012. That’s about $436 billion in spending by government, industry and universities.

    -snip-

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    Thanks, I needed reasons to be optimistic


    MANY MEN WANTED TO LAY ME DOWN, BUT FEW WANTED TO LIFT ME UP

    -Eartha Kitt

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    I'll refrain from personal comments, since the comments already posted by others at the same link already cover the situation ...


    (snip)"Is this the type of garbage GS produces? Start with Point #1.... US economy twice the size of China's? Are you kidding me. CIA World Factbook, IMF and others that don't write what their audiences want to hear use the proper measure of economic output, namely Purchasing Power Parity, to measure the output of various economies. Their results show roughly a 20% difference in output, a gap that is shrinking daily. Many of the other points above are equally self-serving."(snip)


    (snip)"I actually laughed out loud at #3... usa maybe ranks 4th if they really try to fudge the numbers"(snip)


    (snip)"The US is chock full of guys like those at Goldman, Harvard Business School, Nobel Prizes in Economics and the sciences, yet when it comes to manufacturing sophisticated products the US has fewer competitive companies every year. So GS does not know what it is talking about. Kodak belly up, GM belly up, Apple can not build the Iphone in the US simply because the use does not have the technology to.make the key components.

    The US is run by a class of brilliant talkers interested in the quick buck and who are not really interested in the US as a nation. Many of the bright talkers have also unravelled the traditional values that created and made the US prosper.

    The US if full of bright talkers but the doers have dissapeared. Much better to be a reporter or a financial analyst or a lawyer or a medical doctor than an engineer or entrepreneur manufacturing things yet the others depend totally.on the skill of the enginer and industrial worker to survive.

    This is why the US is heading for big trouble(snip)


    (snip)There is a very simple reason the parasites at GS think the US economy rules supreme: they are a big part of turning it to a system of parasitism on the economies all over the world. When children and slaves in Africa and Asia exist in higher numbers than every in history that is because american corporations can bring money and products across any border today. But accountability stops dead at any odd fence. Golman Sachs had a huge hand in ruining Greece. But wen Greece went down they had already been paid and were gone. They even profited twice by then betting on Greece going down as they were instrumental in making it happen. As long as criminal parasites like Goldman Sachs not only not go to jail but thrive the world is still on a fast spiral to hell.(snip)
    Last edited by Melonie; 04-27-2013 at 03:26 AM.

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    I would also post this tidbit in regard to #9 ... from


    (snip)"The topic is graduates of science, technology, engineering, and mathematics (STEM). Who is really the “best and the brightest”? Do employers seek skills they cannot find locally or are the employers just looking for cheaper labor that is easier to exploit? Professor Norm Matloff at the University of California-Davis writes “No study, other than those sponsored by the industry, has ever shown a shortage.” This week, a new study of the recent labor market has again shown that there is no shortage. Here is the article at Slashdot

    (snip)"A study released Wednesday by the left-leaning Economic Policy Institute reinforces what a number of researchers have come to believe: that the STEM worker shortage is a myth. The EPI study found that the United States has 'more than a sufficient supply of workers available to work in STEM occupations.' Basic dynamics of supply and demand would dictate that if there were a domestic labor shortage, wages should have risen. Instead, researchers found, they've been flat, with many Americans holding STEM degrees unable to enter the field and a sharply higher share of foreign workers taking jobs in the information technology industry. (IT jobs make up 59 percent of the STEM workforce, according to the study.)"(snip)

    in the Washington Post,

    (snip)The EPI study said that while the overall number of U.S. students who earn STEM degrees is small — a fact that many lawmakers and the news media have seized on — it’s more important to focus on what happens to these students after they graduate. According to the study, they have a surprisingly hard time finding work. Only half of the students graduating from college with a STEM degree are hired into a STEM job, the study said.

    “Even in engineering,” the authors said, “U.S. colleges have historically produced about 50 percent more graduates than are hired into engineering jobs each year.”

    The picture is not that bright for computer science students, either. “For computer science graduates employed one year after graduation . . . about half of those who took a job outside of IT say they did so because the career prospects were better elsewhere, and roughly a third because they couldn’t find a job in IT,” the study said.

    While liberal arts graduates might be used to having to look for jobs with only tenuous connections to their majors, the researchers said this shouldn’t be the case for graduates with degrees attached to specific skills such as engineering"(snip)

    and the original report.

    Key findings include:

    •Guestworkers [ foreign nationals under H1-B visas - sic ] may be filling as many as half of all new IT jobs each year

    •IT workers earn the same today as they did, generally, 14 years ago

    •Currently, only one of every two STEM college graduates is hired into a STEM job each year

    •Policies that expand the supply of guestworkers will discourage U.S. students from going into STEM, and into IT in particular"(snip)

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    and Matt Taibbi of Rolling Stone points out the following re Goldman Sachs and the world's other 'too big to fail' financial institutions ... from


    (snip)"Everything Is Rigged: The Biggest Price-Fixing Scandal Ever

    The Illuminati were amateurs. The second huge financial scandal of the year reveals the real international conspiracy: There's no price the big banks can't fix
    by Matt Taibbi
    APRIL 25, 2013
    Conspiracy theorists of the world, believers in the hidden hands of the Rothschilds and the Masons and the Illuminati, we skeptics owe you an apology. You were right. The players may be a little different, but your basic premise is correct: The world is a rigged game. We found this out in recent months, when a series of related corruption stories spilled out of the financial sector, suggesting the world's largest banks may be fixing the prices of, well, just about everything."(snip)

    (snip)After scandals involving libor and, perhaps, ISDAfix, the question that should have everyone freaked out is this: What other markets out there carry the same potential for manipulation? The answer to that question is far from reassuring, because the potential is almost everywhere. From gold to gas to swaps to interest rates, prices all over the world are dependent upon little private cabals of cigar-chomping insiders we're forced to trust.

    "In all the over-the-counter markets, you don't really have pricing except by a bunch of guys getting together," Masters notes glumly.

    That includes the markets for gold (where prices are set by five banks in a Libor-ish teleconferencing process that, ironically, was created in part by N M Rothschild & Sons) and silver (whose price is set by just three banks), as well as benchmark rates in numerous other commodities – jet fuel, diesel, electric power, coal, you name it. The problem in each of these markets is the same: We all have to rely upon the honesty of companies like Barclays (already caught and fined $453 million for rigging Libor) or JPMorgan Chase (paid a $228 million settlement for rigging municipal-bond auctions) or UBS (fined a collective $1.66 billion for both muni-bond rigging and Libor manipulation) to faithfully report the real prices of things like interest rates, swaps, currencies and commodities.

    All of these benchmarks based on voluntary reporting are now being looked at by regulators around the world, and God knows what they'll find. The European Federation of Financial Services Users wrote in an official EU survey last summer that all of these systems are ripe targets for manipulation. "In general," it wrote, "those markets which are based on non-attested, voluntary submission of data from agents whose benefits depend on such benchmarks are especially vulnerable of market abuse and distortion."

    Translation: When prices are set by companies that can profit by manipulating them, we're fucked.

    "You name it," says Frenk. "Any of these benchmarks is a possibility for corruption."

    The only reason this problem has not received the attention it deserves is because the scale of it is so enormous that ordinary people simply cannot see it. It's not just stealing by reaching a hand into your pocket and taking out money, but stealing in which banks can hit a few keystrokes and magically make whatever's in your pocket worth less. This is corruption at the molecular level of the economy, Space Age stealing – and it's only just coming into view.

    This story is from the [ upcoming - sic ] May 9th, 2013 issue of Rolling Stone."(snip)


    If you believe Matt's analysis, then you'll acknowledge the possibility that Goldman Sachs touting the US economy / stock market has an intended self-serving purpose ... to attempt to induce 'low information' investors to sell their gold and other commodities, and to move the proceeds into the US stock and bond markets ... with GS profiting from both ends !

  8. #6
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    Default Re: 10 reasons to be optimistic about the U.S. economy

    On balance, I think the truth is probably where it usually resides ; somewhere between the two extremes of optimism vs. pessimism.

    1. Yes, the U.S. still has the world's largest economy but as Melonie points out, the gap is closing.

    2. True but disposable income and net worth for the average American are both DOWN.

    3. True

    4. True

    5. True BUT some analysts think that the predicted job increases are too optimistic.

    6. Shaky at best. The U.S. has the second highest NOMINAL corporate tax rate in the world plus a relatively high regulatory burden. It also depends VERY heavily on whch state we are talking about : Florida ? Texas ? California ? N.Y. ?

    7. If , IF we survive until 2050. O.K., that was a little hyperbolic. We still have far too many unwed mothers producing those children. We also have an aging group of baby-boomers.

    8. True but China's military manpower costs are a pittance compared to ours. Plus we are a world-wide power while China is much more regional.

    9. True for now and as far as it goes. We could and should do a LOT more to retain foreign engineers that we educate ( and a lot more scientists and technicians ) and then force to leave the U.S.

    10. True but our funding of those things is actually LOWER than what many analysts say we need to do. To avoid repetition and rehashing , please see my "Eating The Seed Corn " thread.

    You haven't given any mention to our underfunded and crumbling infrastructure ; bankrupt cities and states ; youth and minority unemployment. The point is that while there are certainly positives ( we are in much better shape than most of Europe ) I question just how rosy an outlook is really justified. That being said, I think you are right that all is not doom and gloom and SOME relative optimism is justified.

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    Quote Originally Posted by Eric Stoner View Post

    7. If , IF we survive until 2050. O.K., that was a little hyperbolic. We still have far too many unwed mothers producing those children. We also have an aging group of baby-boomers.
    There are still many teenagers having children, but the rate has fallen significantly over the past 20 years.

    http://www.cdc.gov/nchs/data/databriefs/db89.pdf

    I expect it to fall even more, now that health insurance companies are required to provide contraception for free.


    Quote Originally Posted by Eric Stoner View Post
    You haven't given any mention to our underfunded and crumbling infrastructure ; bankrupt cities and states ; youth and minority unemployment. The point is that while there are certainly positives ( we are in much better shape than most of Europe ) I question just how rosy an outlook is really justified. That being said, I think you are right that all is not doom and gloom and SOME relative optimism is justified.
    I agree that we're not spending nearly enough to maintain our infrastructure. I see this as possibly being a major problem in the future. What's sad is that we have the means to build and maintain a first-rate infrastructure, but our government isn't willing to do it.

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    from Graham Summers at


    (snip)Below is a price performance chart for the S&P 500 against Fed EX (postage and shipping), Arcelor Mittal (steel), and Caterpillar (machinery). As you can see, the real economy is falling. But stocks keep holding up.



    We’ve seen this kind of divergence between stocks and the economy before in 2008. We all know how that ended.(snip)


    The author's point, of course, is that the 'real' economy is already losing ground, while the 'paper' economy is still being levitated by ... 'printing' even more 'paper' !!!

    For any Dollar Den readers who aren't familiar with the component company stocks in the S&P index, it is heavily skewed towards financial companies ... big Wall St. banks, big insurance companies etc. And indeed these financial companies have been doing comparatively well lately ( thanks in no small part to FED money printing etc. ).
    Last edited by Melonie; 04-30-2013 at 05:18 AM.

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    Quote Originally Posted by eagle2 View Post
    There are still many teenagers having children, but the rate has fallen significantly over the past 20 years.

    http://www.cdc.gov/nchs/data/databriefs/db89.pdf

    I expect it to fall even more, now that health insurance companies are required to provide contraception for free.




    I agree that we're not spending nearly enough to maintain our infrastructure. I see this as possibly being a major problem in the future. What's sad is that we have the means to build and maintain a first-rate infrastructure, but our government isn't willing to do it.
    Are you sure ? What is it now ? - 70 % of all African American children are born out of wedlock. For white children I think it is approaching 40%. Half of all marriages end in divorce. The problem is not the availability of contraception but getting people to use it . Schools and Planned Parenthood ( to name just two sources ) have increased the availability of contraception. We still have far too much irresponsible behavior.

    You and I have long agreed on increased infrastructure spending.

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    Quote Originally Posted by Melonie View Post
    from Graham Summers at http://www.gainspainscapital.com/


    (snip)Below is a price performance chart for the S&P 500 against Fed EX (postage and shipping), Arcelor Mittal (steel), and Caterpillar (machinery). As you can see, the real economy is falling. But stocks keep holding up.



    We’ve seen this kind of divergence between stocks and the economy before in 2008. We all know how that ended.(snip)


    The author's point, of course, is that the 'real' economy is already losing ground, while the 'paper' economy is still being levitated by ... 'printing' even more 'paper' !!!

    For any Dollar Den readers who aren't familiar with the component company stocks in the S&P index, it is heavily skewed towards financial companies ... big Wall St. banks, big insurance companies etc. And indeed these financial companies have been doing comparatively well lately ( thanks in no small part to FED money printing etc. ).
    Now it's your turn for a "True , But " lol. You are right about the Dow stocks BUT the S & P and Nasdaq ( heavily weighted toward tech ) have also been going up.

    Here's the funny thing about what the Fed has been doing and partly how and why "hard money" folks like me were overly pessimistic : Not a lot of that money is actually circulating. The big banks have glommed a lot of it. Monetary velocity is still low. The Fed did a fine job of keeping the big banks and Wall Street afloat but not enough has trickled down to Main Street. Ironic isn't it ? All the "doves" that Obama appointed to the Fed who would sue if anyone said they were practicing Reaganomics are doing just that with monetary policy. The problem is that the horses being stuffed with all those oats are not pooping out enough to feed the sparrows - to borrow the crudest analogy from Reagan's worst critics.

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    Default Re: 10 reasons to be optimistic about the U.S. economy

    As an alternative to getting bogged down yet again 'microscopically examining moss on trees' instead of looking at the 'forest', I'll throw in today's latest piece of 'good news'

    from


    (snip)"When it comes to the US housing market there appear to be three groups of people: those who have either unlimited cash and/or access to credit, and like the most rabid of bubble-chasing speculators, are perfectly happy to engage in a game of Flip That House for a short-term profit pending the discovery of a greater fool (often times converting the house into rental properties as numerous hedge funds have been doing on cost-free basis courtesy of the government's REO-To-Rent program ) - they are the vast minority of speculators; then there are those who currently rent and are opportunistically looking at home prices, willing to dip their toe at the right price - these too are few and far between and mostly represent a function of the natural growth of the US household offset by the availability of jobs; and then there is everyone else. Sadly, it is the "everyone else" that is the vast majority of the US population.

    It is this "everyone else" that is once again being forced out of housing due to both the ramping bubble in housing prices making housing affordable primarily to those who buy with the intention of flipping, and due to the lack of available credit to those who actually need it (see sad state of commercial bank loans in the US).

    Finally, it is this "everyone else" who comprises the bulk of those who have been kicked out of the American Dream, whose core pillar has always been owning your own home (with or without a massive mortgage attached), not renting.

    As the US Census Bureau reported earlier today, the US homeownership rates in the first quarter of 2013 dropped by another 0.4% to a fresh 18 years low, or 65% - the lowest since 1995!

    That this progressive, ongoing decline in ownership is taking place despite allegedly record home affordability is without doubt the most troubling feature of the economic "recovery" which has forced ever more Americans to shift away from owning and into renting, as can be seen by the next two charts showing the median asking rent and sale prices for vacant rent units and for sale units. While home prices have a long way to go still countrywide (excluding the occasional regional bubble market such as LA and NY), rents are already at record highs, which explains why it is every hedge fund's dream to become a landlord.





    However, it is only a matter of time before zero-cost subsidized rental pass thru units owned by hedge funds who can therefore keep the rental asking price as high as they wish, forces out more and more Americans out of the Adjusted American Dream, where renting is the new buying, (snip)


    From the standpoint of the thread's topic i.e. reasons for optimism for the US economy, the important take-away from the above blurb is this. Thanks to US taxpayer backstopping of hedge funds / big banks rental property ownership, in combination with US taxpayer funding for subsidized rent programs with 'no questions asked', a distorted market has now been created where average monthly rent costs are at near record highs ( and still rising ) while the value of rental properties themselves remain well below record levels. In a US economy that is 70% consumer driven, rising rent prices are yet one more factor which reduces the remaining 'discretionary' income available for future consumption.


    On the other topic, if anybody takes the trouble to historically view the S&P and other US stock indexes in terms of 'current' dollars, today's index levels are below those of pre-crash 2007 and WELL below those of pre tech bust 2000. It is only FED money printing which has raised the numeric value of the indexes to near record levels, but levels which are being ( distortedly ) measured in 'devalued' current dollars versus higher valued 2007 dollars and even higher valued 2000 dollars. The same 'purchasing power parity' versus 'inflated' dollars methodology error thus applies to #2 as well as #1
    Last edited by Melonie; 05-01-2013 at 08:11 AM.

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