The Brains Behind US Economic Growth

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We’ve experienced mixed emotions in the markets lately, resulting in little movement in either direction.  Lighter summer trading is partly to blame.  Although summer’s not even here yet, it’s really been a long and rainy season so any sunlight is seen as a turn of the corner.

Nevertheless, the mixed emotions in the market are also due to the fact that investors are unsure whether this years’ rally will continue upward or if the rally will lose steam and reverse.  Technology stocks are acting as a positive forward-looking indicator with upbeat earnings and buzzworthy IPO’s, but at the same time this is happening we continue to see weak economic numbers.

Righting a huge ship like the US economy in the midst of the stormy seas of international finance is about as hard and unpredictable job as they come.  The techniques used in the 1990’s to stimulate the economy won’t necessarily work today — only 20 years later — because the forces that create the waves and crests in the sea that we’re in are constantly changing.

Lowering taxes, keeping interest rates low, quantitative easing, and other techniques employed by our administration may have short to mid-term effects.  But after any positive effects of these measures lose steam, what’s next?

The spirit of the American people is one that jumps into action in times of crisis.  I’ve noticed a trend where popular reality shows aren’t as popular anymore, and folks aren’t as enthralled by the celebrities who are famous for doing nothing.  Or even by celebrities in general.

What we are doing is reading more books on our iPads, watching less TV and pondering going back to school for more education (despite the cost and weak job prospects after graduation).

Our government can turn as many levers of the economy as they’re able to, but the real forces behind flipping the economy today are the brains of American people.  Our brains may ultimately find a way to help the US economy become profitable again by competing and profiting internationally in niche areas.

China and other countries currently hold US debt.  If the US competes with those economies or imposes high tariffs on their imports, we run the risk of hampering their ability to have domestic economic growth.  Subsequently, if their economies start to weaken they may leverage the ability to call in their loans to the US in order to get their money back.  Depending on the state of our economy and ability to pay back those loans, a move like that could cripple the US.

So in order to earn money to get out of debt, the US needs to find new and niche ways to compete on the global stage — ways that won’t impact the economies of our creditors.  In order to create streams of income that are so unique that competition is low, as a nation we simply must become smarter.

While I’m examining economic data, I’m also keeping an eye on US GDP as a factor of reading levels in the US.  They may not be highly correlated, but no doubt a relationship exists between the two.  Even domestic investments such as improving our infrastructure can have a positive impact if we take that as an opportunity to learn innovative ways to get from point A to B.  As a side note, my vote is telepathy — if we figure that out, then we may also watch the markets soar!

So this summer, turn off the TV and read a great book (made cooler by one of many reading devices on the market).  I’m all for watching the Jersey Shore, but also for visiting the shore and having thoughtful conversations with friends.

It’s in our nature and ultimately in our hands to help the ship right itself and once again sail off into the sunset like one of many adventure novels we may be reading this summer.