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| Morris Beschloss |
From any point of view, the totality of Presidential, Congressional, gubernatorial, and state legislative decisions will prove to be the most critical for this country's future since the Carter-Reagan showdown in 1980. Rather than a "changing-of-the-guard," it's become clear that this year's election will determine which governing philosophy will be predominant for years to come, impacting the future of all Americans and, specifically, all aspects of business, industry and professions, as well as future domestic and foreign policy directions.
While the political will of the American voters will get ready to make itself felt at the ballot box, major economic directions will come into play simultaneously. Despite the fact that the vast majority of the businesses, large and small with whom we have been in touch, have been chafing under current regulations and contemplated new ones, there seems to be an undercurrent of growth that will move America's gross domestic product of goods and services out of the post-recession inertia that typified the overall 2011 economic scenario.
Unlike the barren 17 nation Eurozone, which has roiled American financial markets for the past four months, the overall U.S. economy is in a surprisingly strong position for a potential upside breakout, if its underlying shackles can be loosened by rational governmental decisions. America's underlying corporate, and much of its independent businesses are in remarkably good shape financially and rapidly improving productivity.
The demand outlook, which is the key to unexpected improvements could be favorably affected by the following factors:
1) The consumer sector, which has for decades provided two-thirds of the nation's $14.7 trillion gross domestic product has been surprisingly resilient. Even though reducing the heavy debt burden of the go-go years, which ended in late 2008, and returning to a close to 4% savings rate, the rush to the stores, both personally and on the internet, has generated improving retail activity, especially late in the year.
This buying upswing, which has been felt most emphatically at the 'discount' counters, will likely be projecting its momentum well into the New Year.
2) While the once massive construction sector has been reduced to depression level status since the global 2008 financial disaster, the switch from home ownership to rentals is starting to make itself felt in multi-family apartment buildings in metropolitan areas, as well as lease-designated houses outside the big cities. But many contractors have also found themselves busy with maintenance, upgrading, and energy efficiency rehab in much of the housing sector.
3) The automotive industry, although down one third in both unit sales and workers employed, has
returned to profitability. Led by the non-government-supported Ford Motor Company, America's love affair with automobiles, even to some extent, SUV's, has been reignited, but with much more prudent multi-year retention and turnover.
As in housing, the repair and maintenance of much higher retention mileage has benefitted the thousands of equipment suppliers, catering to that industry.
4) Energy. This potentially explosive growth sector, straddling power generation, oil and gas extraction, transmission, refining, derivative-producing (gasoline, heating oil, jet fuel, diesel) is on a major transitional state that could favorably impact the U.S. trade gap, create massive new employment, and potentially add to exports. This is already happening in the case of coal to Asia and the growing shipment of gasoline to Mexico, which now count on the U.S. as a gas supplier for 60% of its usage. Due to the breakthrough of its fracturing technology, America's energy sector has already converted its natural gas needs into a surplus, anticipating a future export opportunity.
Although only at an embryonic stage of development, this cracking of dolomite rock to free the underlying oil and natural gas, the Bakken Belt in North Dakota is already providing 450,000 barrels a day. With other developing fields like the New York/Pennsylvania Marcellus shale are becoming productive, this could be only the beginning, especially with $100 per barrel oil pricing making this procedure profitable.
The barrier to unlimited energy growth is not technological, but Environmental Protection Agency inspired. With the Administration committed to an unrealistic energy replacement by such renewables as solar, wind, geothermal, and ethanol, additional expansion of fracking will have to await the outcome of the upcoming election.
However, with the national electrical infrastructure in disrepair and incapable of handling a major economic turnaround, the blackouts and brownouts occurring with growing frequency could force the government's hand this year in loosening the unreasonable restraints imposed by the Environmental Protection Agency.
However the "cookie crumbles," the pipe-valve-fittings sector and attendant products relating to this trillion dollar industry is embarking on what could become the most lucrative leap forward it has ever experienced.
5) Exports. Already in the process of topping its best year ever, and realistically anticipating a $2 trillion dollar annual volume in 2012, this previously unimportant factor in America's traditional industrial/commercial panoply, exports have shot forth as the gross domestic product's leading component, due to the demand for a great variety of U.S. offerings. Although a relatively weak dollar is getting most the credit, it's America's technological expertise, as well as the diversity and quality of its goods and services that will make 2012 the greatest year ever for this once eclipsed business entity.
World leading categories include agricultural products, armaments, military and civilian aircraft, and heavy construction machinery for openers.
6) Employment. The one continuing bleak cloud that will overhang the 2012 economic outlook is the inability to hire the millions looking to be fully employed. Although the massive global recession is primarily to blame, the revolutionary technology on both shop floor and back office have made a massive number of full time employees expendable. The soaring costs of healthcare expense and regulatory expenses have made owners and managers wary of increased staffing levels. With hiring levels precipitously declining, as companies do more with less, there is little chance that the unemployment picture will improve significantly in the 2012 business year.
