“I’ve had a lot of worries in my life, most of which never happened.” – Mark Twain
I’ll be the first to admit it. Much of the Financial Pocket series has been focused on the negative aspects of the United States’ economy. I guess you can’t really blame me — there’s a lot of material these days.
At the same time, however, it is important to focus on the positive aspects of the economy. I am going to attempt to do this without looking through a partisan lens. There is an important reason for this. Lest we forget, the American economy is run by Americans — not politicians from either side of the aisle. The mantra of this column has always been “free markets are better markets.” This simply means that I prefer an economy free from government interference from either party.
With that being said, presented for your approval, and without further ado, here are The Top 7 Reasons Why The American Economy Isn’t So Bad.
1. Jobs are being created.
Yes, we can always poo-poo the numbers created on a monthly basis as just barely beating population growth. But as I have said before, every job created means one less American looking for a job, collecting SSI. America does not have the jobs catastrophes like Spain and Greece do, where the unemployment rate is around a quarter of the population. We should be thankful that American businesses — despite all of the headwinds — are still creating jobs.
2. Small business continues to develop.
I am not going to suggest that starting a business is easy. But let’s be honest: if there is one place in the world where it is possible for a small business to thrive and become a bigger business, it’s America. Nearly eight out of ten business owners that are millionaires are self-made. Americans are fortunate in this regard.
3. Social status does not hold folks down, nor does it prevent “climbing” up to middle class or upper middle class status.
Yeah, it’s not easy. But it still happens in America. You can be born into a poorer family and climb your way to the top. A recent study by a liberal group of folks found that this still happens. I’ve noted that 40% of McDonald’s executives started at the lower levels of the corporation as a cashier, burger flipper, or fry jockey. McDonald’s isn’t the only corporation that hires and promotes from within. Hard work pays off and can lead to career advancement. That’s upward mobility, folks.
4. If you are young, you still have your greatest asset available to you.
The greatest asset? The luxury of time. I’ve written before about how time is your friend when it comes to savings and investment. The more time you have to compound your wealth, the more your money can work for you and the larger the impact of a saved and invested dollar will be when you retire. $2,000 saved a year for seven years, given enough time and assuming a historical rate of return, will turn into a million dollars by retirement.
Let’s face it: working, saving, and investing for the long term are the ways that most of us will generate funds for savings and retirement. Don’t plan on hitting the Powerball or a grand slam in the stock market. The longer we have to save and invest prudently, the better off we will be in the future.
5. If you are older, are things really all that bad?
If you are nearing retirement, or are more developed in your career, congratulations. You have weathered the storm and done pretty well. If you held your stock and bond holdings through the 2008 crisis, you have recovered their value and perhaps done better. The S&P is up over 20% from January 2008. Ok, that doesn’t sound like that great of a return for five years, but think about it — that includes a near 50% drop in value over a couple month period during the financial crisis. If you were in for the long term, you’re doing OK.
6. Leading economic indicators are doing well.
I quipped recently that leading indicators don’t put food on the table or gas in the car, but they are an important measure of the global economy and predictive of the direction in which the economy is moving. Leading indicators are looking good. Despite all of the adversity and “headwinds,” economic activity is picking up. This is a good thing for all Americans, whether employed, recently unemployed, or long-term unemployed.
7. Fracking will help save America
#GutsyCall, right? Fracking (hydraulic fracturing), in case you are unfamiliar with the term, is a way to use highly pressurized liquid to bust through rock and access previously unreachable sources of energy, primarily oil and natural gas. This post by the great John Stossel lists several reasons why fracking is great for America. Summed up, the business creates jobs which aren’t service-oriented, but are jobs which relate to the production of a commodity. Fracking has lowered the cost of natural gas to the point where it is almost less than a third of the cost of natural gas in Europe. Thankfully, the federal government has not stuck its nose into the fracking industry.
If you want to look at some of the “real world” benefits of fracking, you really need to check out North Dakota’s economy. North Dakota sports a 3% unemployment rate and a $1.6 billion dollar surplus, which excludes billions more set aside for public works and tax cuts.
Now, if we can get other states to drop the anti-fracking nonsense and follow suit….
In sum, while we can’t disregard the problems with the economy, it’s not healthy to focus on them to the exclusion of the positive aspects of the American economy. Americans are a resilient bunch. This (the effects of the Great Recession), too, shall pass.
America has amazing sokojikara or resilience. The Deeper Magic. I am concerned but not doomsday prepping
— James Pethokoukis (@JimPethokoukis) September 21, 2013
As always, free markets are better markets.
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This week, we have a bunch of Federal Reserve board members speaking, so look for market (over)reaction to every throat-clearing sound made. On Tuesday, we can expect housing and manufacturing data, as well as consumer confidence and investor confidence indices. Initial jobless claims of 330,000 is the consensus estimate, along with a GDP estimate of 2.7%, both slated for release on Thursday morning.
Have a great week!