Weekly Commentary: NOT SO BAD AFTER ALL?

September 24, 2012

09.24.12

We came upon a recent article with the catchy title “U.S. EMBARKING ON A NEW SECULAR BULL MARKET?”. We were taken not so much by the title but by the good developments referenced in our economy.  While a caveat of fears about the fiscal cliff exists, a number of fundamental changes have occurred.  Annualized decreases in Government expenditures have actually occurred in the 2009-12. Household debt has decreased from 98% of GDP to 84%.

Households keep only 27% of their wealth in real estate compared for example to France’s 57%. Housing prices have stabilized as have starts.

Then we have some of the advantages accruing from finding more natural gas here.  Drilling is a nice stimulant in itself, but the effects of $3.00 gas prices are manifold. Electricity costs are much lower in the U.S. which has positive effects on our chemical, metals, machinery and paper industries.  We are now competitive with China for domestic prices of steel.  Finally, there is the advance in technology which helps almost every industry.  You need look no further than the Apple iPhone 5 to see the fruits of technological advance.

In sum we sometimes ignore many of the good changes which can underpin the economy and the markets in the years ahead.  Now if we can just get by this fiscal cliff problem.

“Unless someone like you cares a whole awful lot, Nothing is going to get better. It’s not.”
-Dr. Seuss