Down, Not Out: US Economy Set for Resurgance
There is no doubt that the U.S. economy has been struggling for five years and that upcoming burdens such as Obamacare will not make things better for the private sector. But on the bright side, there is reason to think that the U.S. economy is still a powerhouse to be reckoned with.
Matt Egan of Fox Business Network recently detailed five reasons why we shouldn't bet against the $15.7 trillion U.S. economy as explained in a new Wells Fargo outlook report, and his reasons make for hopeful news.
Egan says that focusing too much on the current negatives "can obscure a strong bullish case to be made in favor of what is still the world’s largest economy."
"Unlike crisis-ravaged Europe and credit-addicted China," Egan writes, "the U.S. has at least five key characteristics that support its $15.7 trillion economy: record profits, leading innovation, resurgent energy production, stabilizing housing and banking markets and relatively favorable demographics."
Egan's first reason, record profits, is one statistic that many point to in order to "prove" that Barack Obama's policies are doing just fine. But Egan says the record profits are more because of "super-lean margins and improving fundamentals."
He also points out that most corporations have been reluctant to pump any of those record profits into growth. Many analysts say that this is because the business sector is afraid to expand right now until they learn what the cost of government will be once Obamacare and more EPA rules are solidified and implemented.
A recent survey of small businesses, for instance, showed that 61 percent fear government intervention.
Still, Egan also notes that shareholders have been treated quite nicely in this climate.
"S&P 500 companies gave out $310.5 billion in dividends during 2012, up 22% from the year before, and the number of stocks paying out a dividend stands at a 13-year high," he wrote.
Some of the other bright spots in our national economy for Egan are the booming energy industry, a rise in innovation and invention, and growing stability in the banking and housing industries -- the latter two which experienced a major collapse a few years ago.
Egan wraps up his sunny estimates by citing the dreaded age demographics that are hitting all western countries. The US will likely experience the least of it.
"Reports estimate that 25.4% of Americans will be 60 or older in 2040, compared with 27.9% in China (27.9%), 31.5% in Canada, 39% in Germany and 43.3% in Japan," Egan wrote.
America also has size on its side. As the third-most populous country in the world, the US is, "expected to see its percentage of young and working-age people soar 42% between 2000 and 2050, compared with declines of 10% in China, 25% in Europe and 40% in Japan."
So, there is some reason to feel things aren't as bad as we fear.