It’s the shortest day of the year today, and as we look ahead to 2014 there are reasons for a more positive outlook about the economy in America. There are indication that politically the country may be moving toward some solutions that will benefit Americans who need most, so they can be more productive. There are also reasons to believe that certain valleys have been passed such as in housing making the future more bright.
First, a look at a few economic indicators...
Housing Starts are Up - The number of housing starts has been one of the most dependable measures of economic recovery, and looking at the charts there is a near obvious observation that starts must return to previous averages, and when they do that means jobs and gdp increases. We may very well be getting a real uptick now.
LA Port Traffic up Year over Year - Not just inbound traffic but outbound is up even more.
Some Jobs Coming Back - With technological improvement that make worker productivity even higher, and reduced transportation costs of goods, there have been some companies seeing a benefit to bringing jobs back.
GDP up more than predicted - the US is growing faster than predicted and that means there is more likelihood of increasing investment going forward as there is more confidence in the US economy
On the political side, there are some good developments as well…
Budget Deal - For the first time in a long time the House passed a budget with little fanfare, and there seems to be an increasing feeling in the Republican party that they have lost the ability to attract new constituents. As a result there is a push back toward the center and away from some of the more radical elements, as seen in Boehner’s recent remarks.
While not quite on the national agenda yet, there are multiple efforts throughout the country to increase the minimum wage. Many state houses have already set minimum wages above the federal rate, and it seems likely that others will follow. There is growing evidence that at least in the current environment that raising the minimum wage will increase jobs, reduce the deficit, and grow the economy.
There is a lot of money on the side lines being saved by corporations who are flush with record levels cash.
Many of the federal benefits paid for food stamps and other entitlements would not be necessary if wages were higher
People on the lower end tend to spend almost 100% of what they earn back into the economy, and a stronger middle class makes for a more consumer driven economy.
In the area of energy, the increase in shale production, and the move toward the United States to actually make more oil than they use is huge in the short term. This may not be maintainable, but it helps insure against shocks to the economy such as a conflict in the Middle East. It also helps keep the price of oil lower, which especially helps the middle class at the gas pump.
In the area of healthcare, the new law will especially help those in the Lower Middle Class. With less expensive healthcare costs, they can get the help they need and return to work, making them more productive. So often people on a minimum wage are one step away from homelessness or a similar fate, and a simple illness can push them over the edge. This law helps those that are a little below average in the middle class, and should strengthen the middle class as a whole in the years ahead.
While more of an addendum than central point, I think the legalization of cannabis could have far reaching effects that will reduce the deficit, increase productivity, and strengthen the governments.
Mexico and other countries in South and Central America are ravaged by the drug war. This reduces tourism, and makes it hard to do other forms of business. As our neighbors get stronger, we can too. Just recently Uruguay legalized Cannabis and they had support of some of their neighbors.
In the United States, multiple states have some level of legalization, and are moving increasingly toward taxation, producing a new source of revenue, and putting some criminals out of business.
There is ample evidence that drug laws for possession are too strict, and that we have more people in prison per capita than any other developed nation. This decreases worker productivity and increases government spending.
The World is changing fast but the future is bright! Hopefully, 2014 will be the beginning of less political division accompanied by a renewed feeling that the country is ready to move forward again.