According to Francisco Blanch, head of commodities with Bank of America, the U.S. was the single largest contributor to the global oil supply last year, with a net of 395,000 barrels per day. Most of the new production was coming out of North Dakota’s shale oil fields, but other domestic sources are proving strong as well.
An innovative process called hydraulic fracturing or “fracking” — breaking rocks with jets of water — has been a breakthrough technology to release oil from huge shale reserves throughout the U.S.
This is just one of the reasons that a new wave of optimism is building around the U.S. economy and reminding us all of its unbelievable resilience. There are others.
Chinese labor rates boomed in the past 10 years and are no longer a bargain compared to the costs of some areas of the U.S., most notably the right-to-work states in the American South. Productivity-adjusted wages will narrow even more between the U.S. and China, reports The Telegraph, a British publication.
“Costs to do business overseas, including shipping, reliability issues, technology piracy and others are shifting the advantage back to the U.S.,” The Telegraph concludes.
There’s real evidence of this change. Volkswagen and Korean electronics maker Samsung have begun investing in production plants in the U.S. Big American companies like Intel, GM, Caterpillar and others are opting to stay home rather than invest abroad. Boeing is bringing more of its 787 production chain back into the U.S. and simultaneously opening a second production plant in South Carolina, where skilled labor and a wage environment beat the overseas alternatives.
Another advantage we possess is that our population is still growing. Americans have a fertility rate above 2.0. Countries facing demographic decay under that rate include Japan, China, Korea, Germany, Italy and even Russia. We will eventually outgrow our burdensome federal debt obligations as more and more young Americans become productive and older citizens who depend on them die. The baby boomer bubble in the U.S. is an anomaly, not a permanent situation. Over the next 10 years, the boomers’ children — the echo boomers — will be in the workforce in larger numbers and replace them in positions of leadership and influence.
The U.S. still remains the country with the most top universities, spawning innovation at a higher level than anywhere else in the world. We have a common language and very little internal strife.
We are still the center of venture capital in the world and have robust transportation systems.
While Mexico presents some problems, most countries could only wish for a neighbor as resource-laden and friendly as Canada.
Often underappreciated, American farmers are so efficient that we use only 1 percent of our population to feed ourselves and still have enough to be a net exporter to feed the rest of the world.
Our still-dominant sea power position and military bases in strategic locations means we control nearly every shipping lane on the globe.
These give us several advantages over Europe, Russia and China, making us still the safest big country in which to do business in the world. Once our president — no matter who he or she is — stops trying to tinker with a good thing, corporations will stop hoarding cash and banks will lend again. Their behavior is what we should expect when there’s uncertainty being created through political words and actions.
“This does not imply a healthy U.S. recovery,” reports The Telegraph, however. China needs to deflate its credit bubble and the Western economies still need to purge debt. That will take some time.
America’s greatest advantage, though, is that most of the world is better off when America is healthy. That and a still-strong hand suggest the 21st century may be American after all, just like the last.
Tom Hoban is co-owner of Everett-based Coast group of commercial real estate companies. Contact him at tomhoban@coastmgt.com or 425-339-3638.
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