Five reasons to remain optimistic about the U.S. economy
The U.S. economy remains in a pronounced recession that is rapidly approaching the 18-month mark. Meanwhile, U.S. Federal Reserve Chairman Ben Bernanke was up testifying on Capitol Hill again, underlining, in the most diplomatic terms possible, that more federal money will be needed for both the banking bailout and for financial system stabilization.
In these trying times, it's understandable if investors and others are subdued. It's hard to find many positives, given the U.S. economy's current condition and those of world's other major economies. Still, a wise grandmother once said, "Things get better when you start to think better." And she's right. Grandma is always right. Accordingly, here are five reasons to remain optimistic:
1. President Obama's renewable energy program. "What?" you say. Indeed, it is a plus. President Obama's renewable energy plan will help jump-start the solar, wind, and related alternative energy sectors -- and that has the potential to create many new jobs. In addition, it could create a new, major export sector for American companies and serve as a growth engine for the U.S. economy.
The United States once led in solar and wind power technology, but we've fallen behind Europe and other regions when it comes to solar/wind development. Obama's plan will create jobs, generate commerce, and increase export revenues. It will also make the nation more energy-independent. And wouldn't hundreds of billions of dollars invested to create good-paying jobs in the United States represent a real plus, given that the U.S. currently is about five million jobs short of full employment?
2. Health care reform. Investors may balk at this one, as well -- President Obama's $676 billion, 10-year plan to gradually move the nation toward universal health care coverage. But Obama's program will not only deploy new technologies that will make health care delivery more efficient, the overall cost of health care per person will drop when newly insured citizens stop showing up at emergency rooms for treatment, but instead visit their family physician regularly -- before they get really sick -- saving the system billions. Obama's plan will also eventually free up hundreds of billions of health care dollars for other uses in the economy. The United States currently spends about 15% of its gross domestic product on health care, almost twice per capita what other, major economies spend. That per capita level is unsustainable, and the system doesn't even insure everyone! Obama's plan will wring waste and mismanagement out of the system, benefiting the economy.
Further, universal health care coverage will also lead to better matches between employee and company position: employees will no longer feel compelled to remain with a company for fear of losing health care benefits. This will lead to more employees securing positions they want and that match their career goals.
3. Smart electric grid. President Obama also wants to substantially upgrade the nation's broken down, inadequate electric grid. Imagine a smart supergrid: power delivered from any point in the nation to almost any region. The system seamlessly recaptures energy from self-generators (including residential wind mills). There's massive capacity to handle the needs of the nation's growing economy through the mid-21st century. Blackouts are a rarity, and the nation has so much power, it can export some.
4. A floor for the Dow. John Murphy, Chief Technical Analyst, StockCharts.com, is one of the best and most respected technical analysts in the investment community. Murphy's ray of light? Murphy sees technical support for the Dow at the 6,300 level. If the Dow can hold at 6,300, that will would be a positive. That may not seem like much of a positive, but if it occurs, it could presage the end of the bear market and the road to the next bull run. Conduct your own stock/sector/market due diligence, of course, but you ignore Murphy's analysis at your peril.
5. The U.S.'s productive capacity and the inherent fairness of the American people. This positive may be the strongest and the most important. In the depth of the Great Depression, President Franklin D. Roosevelt said that so long as the nation retained its productive capacity and its common sense, the nation would overcome any obstacle. Those two qualities are implied in FDR's best known quote: "The only thing we have to fear is, fear itself!" It was true in 1933 and it's true today.
I have no doubt that the United States will recover from this recession and emerge even stronger.
What are you emphasizing to remain optimistic and hopeful? Let us know what you think.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.<