US economy to be stronger than ever after recovery

            

Obama’s defeat in the midterm election shows that most Americans still lack confidence in the future of their economy. However, recent trends prove that America is on the path to a sustainable recovery, the type that makes most of the world drool with envy, and that it will probably emerge stronger than it was before the crisis.

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            One of the most striking facts, which was unthinkable 10 years ago, is that which decided to relocate in the past decades, now increasingly tend to re-shore to the American mainland. Some big companies, like Apple, Nissan, Caterpillar or Ford are progressively moving their production back to the US, with more than 50,000 jobs have been re-shored in the past 3 years, and more than 50% of big American companies consider moving back to the US. The reasons have little to do with patriotism or altruism. According to a survey carried out by the Boston Consulting Group in 2013 among 252 companies keening  to move back, the  main reasons were : a shorter supply chain and reduced shipping costs (80%) better access to skilled labor (74%), local control over manufacturing process and better quality (75%). In addition, the energy prices in China, the main destination for relocating companies , are rising. One important reason is also that high technology is one of the main components of the growth recovery, because it is a sector in constant need for innovation and skilled labor. To give an example, the game industry is growing  4 times faster than the US economy , since in this branch , artists and IT engineers are vital.

Speaking about energy, the US are moving toward energy independence. An old dream which is now about to be achieved. With the recent development of shale gas, and the fact that domestic production of crude oil has risen by 15% over the last year, energy imports keeps dropping, which reduces the trade deficit significantly. And with expanding domestic production, energy prices have never been so low, which  boosts economic growth, given America’s dependency on oil.  Moreover, according to the IEA, the US could be the world’s top oil producer by 2015, and would therefore go from an energy importers to an energy exporter (a fact that would change not only America, but also geopolitical relations, and not in the interests of OPEC countries).

What puts America in a better position than Europe is also that it did not make such austerity measures. On the contrary, the fed has kept interests rates very low, and banks started lending again after having been bailed out after the crisis, which  made investors keep confidence in the financial system (The stock exchange is doing well, and the high stock market boosts  confidence and consumers’ willingness  to spend). Also, there were fewer spending cuts than in Europe, where taxes are rising constantly, putting the economy in a chokehold, while unemployment is dangerously high). Low-interest rates, low unemployment and a booming stock market have permitted domestic consumption to maintain and to rise (+9.2% from 2011 to 2012, Word Bank). Unemployment is low at 5.8%, and more than 4 million jobs have been created in the past two years (more than 10% in France).

In conclusion , the US economy is recovering, with now one of the highest growth rates of the OECD countries (about 3.5%), rising household consumption (which benefits from low energy prices) and stock exchange.  But it could also be in a much better position than it was before the crisis, if it succeeds in achieving energy independence, and rebuilding its domestic manufacturing power

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                                                                                                               Arthur de Nolly