If every piece of
positive news was a petal, then you might say the American economy was in bloom
last week. Moving into the holiday season, consumer confidence was at a
five-month high.
Early in the week,
manufacturing showed improvement. On Thursday, the U.S. Commerce Department
unfurled the news the American economy grew faster than expected during the
third quarter of 2013. The next day, it was reported the unemployment rate was
at the lowest level since 2008. Hourly earnings increased, as did the length of
the work week. Participation in the work force improved slightly, although it
remains at historical lows.
There are sound
reasons to expect America’s resurgence will continue into 2014, according to The Economist. They reported America’s
progress was due, in part, to:
- Policymakers
in the U.S. providing direct government support for failing companies and
creating liquid capital markets that helped companies recover after the
financial crisis.
- Companies benefitting
from an increase in domestic energy production. Often the fuel comes from
unconventional sources.
- American
businesses leading the way in social media. They are expected to blaze the
trail when finding ways to profit from Big Data and developing a sharing
economy.
There was good news in other parts of the world, too. A global trade agreement – the first major deal in 20 years – was reached that could simplify customs procedures and speed up the flow of goods across the world. CNN Money hailed it as the most significant multilateral trade pact since the World Trade Organization was founded. The agreement has the potential to reduce trade costs by as much as 15 percent, saving developing nations about $445 billion each year, and boost the global economy.
Despite the good
economic news, U.S. stock markets slumped through Thursday of last week largely
because of investors’ concerns that positive economic news would encourage the
Federal Reserve to end quantitative easing sooner rather than later. Those
concerns seemed to dissipate with the release of positive employment numbers on
Friday and markets surged higher.
Let’s take a
stroll down memory lane… In a recent issue, The Economist pointed out during March 2009 the prospects for
American companies were pretty sketchy:
“…The Dow Jones
Industrial Average closed below 6,627, a 53% decline from its all-time high
less than two years earlier. The number of American firms in the global top ten
by market capitalization was on its way down from six to three, and America’s
share of the top 50 companies from 50% to 40%. Once regarded even in Communist
China as the business model for the world, corporate America had lost its
crown.”
Oh, the difference
just a few years can make! According to an November 18, 2013 article on Economist.com, If we look ahead to 2014,
American firms are expected to comprise the majority of the global top ten (when
measured by market value) and make up almost two-thirds of the top 50 companies
in the world. It’s not all that surprising when you consider the fact, as a
headline in Forbes announced,
corporate profits are at an all-time record peak making up almost 70 percent of
U.S. gross domestic product.
That may have
something to do with the way Americans are spending their money. Citing an
expert from Bank of America Merrill Lynch, Barron’s
reported:
“U.S. import
growth has shrunk from 11% to less than 1% between 2010 and 2013, while job
growth has repaired from a negative 1.7% to 1.6%... Domestically produced
energy now accounts for 87% of what we consume, up from 70% five years ago, and
the share of vehicles sold here that are manufactured stateside has risen from
63% to 73%… We're also spending more on domestic goods and services... Nearly
40,000 Americans turn 65 every week, and aging boomers tend to steer more of
their disposable income toward services like medical care, accommodation, and
recreation that are typically made in America.”
Perhaps what
Alexis de Tocqueville, French historian and political thinker, said about
America still holds true, “The greatness of America lies not in being more
enlightened than any other nation, but rather in her ability to repair her
faults.”
Weekly Focus – Think
About It
“When even one American who
has done nothing wrong is forced by fear to shut his mind and close his mouth,
then all Americans are in peril.”
--Harry S. Truman, American President
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