On January 30th, the Wall Street Journal published an article entitled “The Coming Tech-led Boom”.  It is an insightful, positive view on good things to come, right here in America.

To quote directly from the article, the authors believe that today, “we sit again on the cusp of three grand technological transformations with the potential to rival (those) of the past century.  All find their epicenters in America: big data, smart manufacturing and the wireless revolution.”

The authors assert that “the American culture is particularly suited to times of tumult and change.”  And, they contend that our culture is “distinguished by….open mindedness, risk-taking, hard work, playfulness….and a healthy dose of anti-establishment thinking.”

The next post will discuss the other two features, in addition to our culture, that most define America and that are essential for bringing about this coming boom.  Check out the entire article if you can’t wait for the next post.

I contend that crony capitalism, where the government picks winners and losers, is a big part of our dissatisfaction right now. Thanks to Glenn Reynolds at Instapundit for the reminder about this clip.

Lately, I have found some positive economic data to blog about and consider.  Additional positive data recently came out from the Empire State Manufacturing Survey.  The Survey indicates that manufacturing activity expanded in New York State, with the general business conditions index climbing to its best reading since April 2011.  In addition, the new orders index rose to its highest level since May 2011.  The Richmond and Philadelphia surveys were also upbeat for the most part.

However, there are other data points that are less positive.  And, while they may not be pointing to a dramatic economic downturn, they should be counted in the mix.  There has been some recent weakness in petroleum usage and electricity output.  Both of these are measures of economic activity, and have fallen rather sharply in the past few weeks.

This mixed data may accurately reflect the fact that we are simply “muddling” along with slow growth and low inflation in various sectors of the economy.  Any significant move in the data, up or down, will give us a good sense of the markets next move.

Private holders of Greek debt have not been able to reach an agreement with the EU finance ministers on restructuring the terms of their Greek debt holdings.  They hold 60% of the outstanding debt, and they don’t want to accept a new rate less than 4% on those holdings.  The EU wants the private debt holders to voluntarily take about a 50% haircut.  From the linked WSJ article:

Austrian Finance Minister Maria Fekter said she’s “not pleased” with progress
so far. “We’re sending a very direct message to Greece that the community
expects more, also in terms of structural reform,” she told reporters. “We’re
not pleased and only when there’s a written message on the table in front of us,
can further assistance be discussed.”

Ms. Fekter said she wanted a written pledge from Greece’s political party
leaders that they were all committed to implement austerity plans.

Swedish Finance Minister Anders Borg also had tough remarks for Greece,
saying that “when it comes to structural and fiscal reform they have not
delivered.”

Greek Finance Minister Evangelos Venizelos acknowledged there have been
slippages in the implementation of austerity measures that Greece has agreed
with its euro-zone peers and the IMF as part of its original bailout program.

I love the term “slippages” in the paragraph above.  Greek politicians talk just like American politicians!

Natural gas prices are at a ten-year low, closing today at $2.29 per mcf.  In the near term, this is certainly not good news for energy companies that derive the majority of their revenues from the production of natural gas.  But if you are looking for reasons to be optimistic about the domestic equity market, these low prices may bolster your confidence.

Many industries that rely on nat gas to fuel production will have this windfall drop straight to their bottom line.  These industries include steel, chemical, and fertilizer companies.  Some companies have the ability to switch between coal and nat gas when the price becomes advantageous.  So, the environment will benefit as well.

While the rejection of the Keystone Pipeline Project was a blow to our nascent energy independence, our abundant, low cost natural gas will go a long way to helping the bottom line of domestic industrial, and manufacturing companies.  This is good for the employees of these companies, as well as their shareholders.

On my way to work yesterday I heard a report on NPR discussing the minimum wage in China.  The reporter was saying that due to the rise in living expenses, Chinese workers were requiring, and in some cases demanding, higher wages.  Some were even threatening suicide to accomplish their goal of a higher minimum wage.

As living expenses rise around the developing world, workers will need higher pay to stay in the cities and urban areas where the manufacturing jobs reside.  They are also beginning to enjoy middle class benefits like modern apartments, appliances, and better food, all of which cost more money.

The higher cost of labor in developing countries, combined with the other risks of manufacturing overseas, and the fact that wage inflation in the U.S. has been subdued, continues to bode well for many of these manufacturing jobs coming back home.

We think so.  Here are 5 things that could go right in 2012, and beyond.

1.  U.S. becomes increasingly energy independent.  This leads to higher employment, and lower energy prices.

2.  More manufacturing, high tech and industrial, begins to find its way back to American shores.

3.  The housing market begins to improve as a plan is implemented to relax refinancing standards for home owners who are current on their mortgages.

4.  Europe begins to focus on fiscal responsibility, and comes up with a viable plan to address liquidity and spending issues, and begins to implement it.

5.  Pro-business, fiscally responsible, candidates are elected in November.  This leads to a simplification of the tax code, a reduction of profligate spending, a real energy policy, and confidence in employers and job seekers.

We have blogged over the past year about a number of these possibilities.  If some of them come to fruition, 2012 could be a very good year.

The Atlantic Magazine has a very interesting article that contains the most important graphs of 2011 as selected by a group of economists.

I think that this graph from the article best explains the volatility of 2011.