Friday, September 27, 2013

GARY SHILLING: Here Are 8 Reasons Why The US Will Be #1 For Years To Come

Shilling says a combination of demographics, education, the advantages of the dollar, and energy production will allow America to emerge from the current moment of economic uncertainty on top of the world.

By 2040, the U.S. ratio of working age to total population will be the highest for all developed nations, at 60.3%. And China's ratio is expected to fall to 63.1% from 72.4% in 2010.

We need to add 1.44 million jbs a year to keep our productivity growth rate at a steady 2.5%, Shilling says. BLS data indicates the working-age population will rise about 2.2 million a year. At a labor participation rate of 63.3%, we should be able to meet the 1.44 million figure.

America's education system is still better than anyone else's, not least because American students are encouraged to think more independently than their counterparts abroad. He also observes that for all its growth, much Chinese industry remains tied to "inefficient, state-owned enterprises."

Declining wages are bad for the individual worker, but on balance yield a more competitive labor force. Shilling notes that after getting bailed out, U.S. automakers were able to shift the pay rate for new workers to $14/hour, half that of veterans.

Americans have little choice but to save more. They no longer trust their stock portfolios to substitute for saving out of current income to educate their kids and finance early retirement.

As we consume less, foreign exporters will see fewer U.S. dollar flows, and America can regain some control over its own finances.

The dollar emerged from the recession largely unscathed, while China's and Japan's currencies face the same structural problems and Europe is still reeling. 

The U.S. can now flex its muscles in the Middle East without triggering an extreme spike in oil prices.