We’re Feel’n Mighty Gloomy

Investing requires some optimism about the future and at the moment we’re not feeling it, according to National data reported today. Reports show that 62% of adults feel the United Sates is on the wrong track, and 57% of voters would prefer to elect a new person to Congress than re-elect their local incumbent representatives.

Glimmers of optimism that emerged in the spring have been snuffed out by frustration over the gulf oil spill. Wars in Iraq and Afghanistan drag on. The economy limps along on one leg. High unemployment persists.

Health care reform passed but left many unconvinced of its value. Wall Street is perceived to be little more than a casino with the odds stacked in favor of the house. Financial regulatory reform grinds slowly through Congress and whatever passes may be so watered down that it is as suspect as the healthcare reform bill. All the while, tougher regulation of the oil and insurance industries waits on the back burner.

Given our sour mood, few of us want to even look at our 401(k) or IRA accounts, let alone actively manage our investments or make additional contributions. It’s easy to procrastinate and rationalize doing nothing.

My advice is don’t give in. Refuse to give up. Yes, things might look bleak. As a country, we’re definitely discouraged. But throwing in the towel never won anything. Sometimes, the best we can do is just persevere. Times change & this too will pass.

Can Our Own Spending Habits Be Driving the Loss of Manufacturing Jobs?

We’ve all heard the claim…that the problem with the U.S. economy is that America doesn’t make anything anymore. That we’ve gotten away from our manufacturing roots and are exporting high-paying manufacturing jobs to China, Taiwan, Mexico, etc.

Daniel Griswold, Director of trade-policy studies at the Cato Institute and author of the book Mad about Trade: Why Main Street America Should Embrace Globalization, makes a compelling case to the contrary.

Griswold acknowledges studies that project China will surpass the United States as the world’s leader in manufacturing by 2015, but he also states that “Manufacturing long ago ceased to be the chief benchmark of economic might & success.” Nevertheless, American manufacturing isn’t declining. As the U.S. economy comes out of recession, Americans will produce more than ever, albeit less than China.

That is as it should be, according to Griswold. He suggests that American’s own evolving consumption preferences are behind the loss of manufacturing leadership, “As incomes rise, we spend a smaller share on goods, such as food and manufactured products, and a higher share on services like healthcare, recreation, education, research, travel, financial services, and more. These are all signs of growing wealth. Americans have traded up the value chain to a more sophisticated array of goods that play more to our strengths as a nation with an educated workforce and plenty of capital per worker. It is time we adjusted our economic and political thinking & understanding.”

Bottom-line: A major reason why manufacturing is relatively less important to what Americans produce is that it is less important to what we consume. Since consumer spending drives the U.S. economy, monitoring consumption trends can point the way to attractive investment opportunities.

Read the full article here: What America Makes Best