Time to reinvest in the US economy?

While we have lots of problems to solve, a Wall Street Journal article I just got around to reading had some interesting news -- (1/19/12 "In an Unsteady World, Time to Exploit America Inc,'s Home Advantage").

These are J.P. Morgan figures for 2011 and their estimates for 2012:

- The U.S. economy grew 1.7% in 2011 and is expected to do a bit better, 2.3% in 2012. We're the safe haven for much of the world's money.

- The Euro area grew slower in 2011 at 1.5% and is expected to actually shrink 0.8% in 2012.

- The U.K. grew 0.9% in 2011 and is expected to eke out 0.2% growth in 2012.

- Emerging markets (e.g. China, India . . .) are still growing, but at a slower rate from their torrid past. Growth in 2011 was around 5.8% and is expected to slow to 4.8% in 2012. The Journal also noted that overseas operations of US companies (Coca Cola, 3M, Caterpillar, etc.) are capturing much of this growth.

What really strikes me about the US economic growth figures is that we're growing despite big cuts in a couple areas. First, local and state funding for everything from schools and fire/police services to public construction has generally taken a hit. Second, the financial sector has (rightly!) taken a hit to its mythical earnings growth.

Compared to the rest of the world, it looks like the US is about as good as it gets to make smart investments in growth. Anyone here hoping to grow a bit in 2012?

Everything goes in cycles. This is why the doomsayers should be ignored. For growth periods, there will always be the decline periods, and so on... no matter what country it is. Emerging's boom has calmed way down. The indexes would probably be off and running right now, but the European thing is going to keep throwing a monkey wrench in the market. So far this year it has been OK, but that issue is going to keep popping up for a long time, and every time it does, there's going to be a slide backwards of one step, for every two or three forward. But it still looks fairly promising, barring some unforeseen disaster. Valuations are still fairly low (comparatively). With this volatility, I think it's important to re-balance back into bonds more often, to try and stave off some of those losses on down periods and keep what you make on the ups.

we have received a fairly large bump in business since about July -

Look at it this way - if the large corporations in the US are indeed sitting on cash, they can't do anything with it. Most banks are charging money to have put large sums on deposit. (i.e. negative interest) And large sums aren't covered by FDIC which gives people pause with the banking climate over the last 3 years - so any money on deposit is not in an interest bearing account.

Normally the money would go into a money market (flat) or some kind of mutual fund (now too risky) . . . so where should the money go?

3 of our largest customers have all articulated that they have plans to put that money to work by improving plants / production lines / equipment upgrades and that is where the bulk of our business is thriving right now.

The US being a safe haven for investment dollars has very few places to go - and if you are a profitable manufacturer - the only place that makes sense is your own plants.

It looks like the growth curves will cross at some time in the future and now might be the time to invest. OTOH, things can be severely tripped up by natural or man-made disasters and there's been no shortage of those.

Less regulation? Seriously? It was deregulation and lack of regulation that was largely responsible for getting us into this mess. Corporations are not evil, but they are not moral either. They will take any advantage they can, regardless of who it hurts or what part of the world they screw up for decades or longer. Regulation is essential to the orderly and sane functioning of capitalism. This is why the Republican party has to embrace ignorance and misinformation, otherwise the folly of their beliefs would be too obvious.

So long as everyone else can stay in a bigger mess then we are things will look pretty good.

An Obama administration backed battery company is currently going bankrupt; the American taxpayers invested $118 million in them. That, along with a host of other 'green' investments made as part of the $787 billion dollar Democratic "stimulus" of '09 really went far in creating "shovel ready jobs".

We need more liberal/progressive economic ideas, they've worked great for the last 3 years

I'd agree that the federal government should be investing in R&D and not in private company loan guarantees.

If we want to support a nascent industry, the one reasonable way might be for government purchases (e.g. cut the Pentagon's electricity bill with solar panels on the top, assuming that makes economic sense).

It's hard to imagine, though, that electing someone like Newt or Mitt will put the country on better financial footing. Recall that the Bush administration gave billions (not millions) of cleanup guarantees and liability caps to the oil industry. Recall that both parties have pursued policies that transferred at least a trillion dollars in wealth from ordinary citizen's savings and real estate values to "too big to fail" executives. Recall the corn for ethanol mess, embraced by both sides, that enriched only companies like ADL.

As for current administration policies working or not working, they deserve maybe a C+ to B-. We were on the brink of failure, an "F" that was avoided. We're now back to slow growth, easily a "B" compared to the rest of the developed world. But, we had an opportunity to change the culture of Wall Street and barely made a dent. Obama was at best naieve about the ethics of some financial types and at worst as captive as the Republicans to their money.

Newt would end up spending millions just on space-capable batteries for the Martian mission he wants. Mitt's economics policies are an endorsement of most everything that went wrong from 2000 to 2008.

Hopefully Democrats have learned the lesson that short term fixes, like trying to play venture capitalist to the alternative energy industry are risks (and gains/losses) better taken by the private sector. Hopefully Republicans have learned that letting a few powerful industries (finance, oil, insurance) run wild through cutting regulations and creating loopholes is even more destructive.

My main point is that choosing one party or the other is no longer a way to make progress for the country. Each party needs to fix itself, and then get back to sharing common purpose for the common good.

Gewehr 98 said:

An Obama administration backed battery company is currently going bankrupt; the American taxpayers invested $118 million in them. That, along with a host of other 'green' investments made as part of the $787 billion dollar Democratic "stimulus" of '09 really went far in creating "shovel ready jobs".

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Oh wow, some investments don't pan out? I thought it was a guarantee that if you put money into a company it would succeed?

I hate when the government invests in new technology like the internet. We all know how that turned out. What a flop!

The stimulus sure did fail. That's why the stock market is booming and the economy is growing.

An economy that was built on a house of cards collapsed and Obama hasn't turned it around to 5% growth yet?!?!?! It's been a whole three years! What a loser! What we need to do is get back to conservatives running the show because that worked out so well last time.

PeteM said:

My main point is that choosing one party or the other is no longer a way to make progress for the country. Each party needs to fix itself, and then get back to sharing common purpose for the common good.

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Earned my vote for best reply in this forum EVER !!

I firmly believe we need a complete overhaul of the corporate tax code to return this country back to the economic model it was built upon.

Just simply advocating "Tax Cut" won't spur investment or economic growth. Carefully examining the growing markets and providing tax incentives for investment to better serve the entire American constituency is a much better approach as we have witnessed in China over the last 10 years

I heard some political pundit on 1 of the news talk shows this morning discussing the level of lobbyist hired by the Wall St Banks pursuing our Washington Lawmakers is astounding. Visiting and calling Washington Lawmakers on both sides of the political isle several times a day, pushing for yet even more deregulation and tax loopholes.

John Welden said:

The stimulus sure did fail. That's why the stock market is booming and the economy is growing.

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You're living on a different planet dude. The stock market is booming? lol The indexes broke even last year... On average they've broke even for more than ten years. We had a lousy little rally coming into 12 so far, which will probably be erased by the crap in Europe, over the next couple months. If it wasn't for dividends, rebalancing, or creative trading, nobody would have made money on stocks at all for years now. I wouldn't call that "booming". And no, I'm not saying it's all Obama's fault. It's nobody's fault... It is what it is. But it's hysterical people like you always having to be either completely 100% for or against a certain group of people, that makes stuff get so screwed up.

Who, exactly, are we talking about when we say "reinvesting in the US economy"?

private individuals, government, or corporations?

government is pretty unlikely, with current debt, deficit, and gridlock.

private individuals- well, hope springs eternal. but most people are trying (and usually failing, as evidenced by the previous post about a flat stock market) to gamble on winners, not "invest" per se in america.
I am a bit different- I have long term IRA investments in american manufacturers like Miller and Lincoln, for example. I could see putting some money in Boeing or Ford or Cat, in terms of stock, for ten years or so, as I think they will do ok long term.

Corporations- well, some of that is already happening.
One very big factor is shipping prices- as oil stays up, and it seems to be doing so, shipping from overseas becomes a bigger and bigger factor.
That is why every major manufacturer builds cars here in the USA, rather than importing too many. Same thing with steel- every major international steel company either has, or is building, steel mills in the USA, although the brazilians are shipping some pigs here of steel that is ready for further processing here.
Other big industries, like aerospace and oilfield are based here, and, as world sales increase, they invest here. Boeing moved a lot of that Italian work back here, when the Italians didnt do it right.

And then, we have inflation in China. Wages there went up something like 20% to 30% this last year alone, and as the prices keep going up there, and they will, some products will move back here. Stuff that is made by teenagers will stay overseas - running shoes, Ipods, tube socks and action figures are still two dollar a day type products, but more expensive goods where labor is a pretty small component may come back more and more.