Last week, as I sweltered in 100-degree weather in Chicago, it was hard to imagine that this winter I will freeze and endure blizzards. It is always hard to imagine change, even predictable change, because our brains are usually imprisoned by the sweat and chill of the moment.
The same is true in business. We tend to be slaves to the moment, bending to the fear of failure when the possibility of success is just as likely if we give hope breath.
July 2012. We have half a year to make things happen, but it feels like the gloomsters are winning at the moment, focused on political gridlock, high unemployment, big budget deficits, and a paralyzed Eurozone.
I think “the scared” control the media because fear sells, but if we take a one to five year view of the economy in the U.S. we should be upbeat, especially if we are in the machining world.
Why am I optimistic about the long-term?
1) The American dream is a bit tarnished today but it certainly has survived. I see it most dramatically when I visit the Bay Area and see people starting businesses, or at least planning to start them, all over the place. And the people are from all over the place. I don’t know how they get into the country, but they figure out a way, maybe by leveraging a tourist visa and a credit card into a new life. I see the same thing in Chicago in the gentrified old neighborhoods near downtown. There is incredible energy and vitality, whether it’s starting a restaurant or driving a taxi. Every 4thof July I marvel at my incredible luck at being born into the rich freedom of America.
2) The renaissance of American manufacturing is really happening. The decline of the last 15 years is reversing. I heard the President of John Deere interviewed on July 4. He said Deere has three plants worldwide that make big combines for harvesting grain – one in China, another in Brazil, and the third in Moline, Illinois. The most efficient plant is the one in Illinois. The head of Caterpillar has made similar comments, and the remarkable re-inflation of the American automotive complex to a 14 million car pace with 70 percent of the cars bought here made here soon is an amazing success story.
3) The biggest reason for continuing high unemployment is the moribund residential housing market, but it is definitely turning around. Homes are starting to sell. You can get a mortgage today without jumping through a million hoops, and the rates are unbelievably cheap. Foreclosures are being bought by speculators for rehab, rental and flipping. Housing starts are creeping up. The rental market is smoking in most big cities. Tradesmen are finding work and buying pickup trucks.
4) The shale gas, shale oil, and oil sands revolution is in full swing in America. The dependence on foreign hydrocarbons will be a thing of the past in 5-10 years. The low price of natural gas is a momentary deterrent to drilling but the thirst for cheap oil and gas by the utility and chemical companies will fuel massive capital spending here in the coming years.
The economists are enthralled by the week-to-week numbers and the tremors from Europe, but if we keep our eye on the ball I think we should feel good about the current trends in the U.S., which should be very good for machining in North America for the next several years.
Question: Do you think unemployment would be higher under an Obama administration or Romney administration?