It has been hard to avoid negative news recently. We all know that there is a debt crisis in Europe, unemployment and home price declines remain problems in the U.S. and political combativeness has drained confidence in U.S. leadership.
While acknowledging the team of factors pulling the rope against economic progress, Schwab’s Chief Investment Strategist, Liz Ann Sonders, points to several promising developments that fewer people have recognized.
- Economic indicators which have indicated potential for recession have improved significantly over the past month.
- Sonders cites work by ISI Research of 10 structural/secular positives that could make the next decade for the U.S. economy better than expected:
- United States versus fractured euro zone
- Flexible labor markets
- Cheap energy sources
- Low dollar
- Technological innovation
- Entrepreneurial activity
- Best universities
- Many of the best companies in the world
- Deep/liquid capital markets
- China’s reliance on the U.S. financial system could actually swing in favor of the U.S. economy: “China may actually be trapped in an addiction to cheap US financing and could increasingly feel its side effects, weakening its competitive position.”
- In a recent edition of The Telegraph, Ambrose Evans-Pritchard, its international business editor who generally leans bearish, was nearly euphoric about the likelihood that global economic power is swinging back to the United States, noting: “The American phoenix is slowly rising again. Within five years or so, the United States will be well on its way to self-sufficiency in fuel and energy. Manufacturing will have closed the labour gap with China in a clutch of key industries. The current account might even be in surplus.”
~ Brooks, Hughes & Jones, Partners in Wealth Management, Tacoma, WA