There is not much good news on the U.S. economy these days.
The sub-prime mortgage crisis is hitting hard and it seems that more is yet to come.
Consumer confidence is falling with a reading in the Reuters/University of Michigan poll of 70.8 for February down from 78.4 in January, a 13 year low.
The Federal Reserve, in an effort to stimulate growth and ease credit supplies, keeps lowering interest rates. The Fed has cut the Federal Funds rate from 5.25% to 3.0% since last September with more cuts expected. Each cut has a couple of negative side effects that further reduce the value of the Dollar and raise inflation (still a historically low 2.1% compared with the 1790-2000 rate of 3.77%).
Late last week the U.S. Gross Domestic Product (GDP), which measures the economy as a whole, grew at an annual rate of a mere 0.6% in the 4th quarter of 2007 as compared with 4.9% the previous quarter (to give you a little long-term perspective, GDP growth averaged 3.5% annually between 1790 and 2000).
Job losses are also on the rise with new jobless claims rising to 373,000 well above the estimate of 350,000.
Finally, the U.S. Dollar is weak, falling to a record low last week against the Euro of $1.5179 Dollars per Euro, the weakest for the Dollar since the inception of the Euro in 1999.
All of this bad news adds up to real problems for Americans in the form of higher prices for globally priced items such as food, gasoline, metals, imported products, hmmm...most of the things we buy.
There is, however, a real opportunity for Americans. In a global economy, where work is done where it is most cost-effective (not just cheapest; quality, efficiency, delivery costs, ease of management, etc. all get factored in), the decline of the U.S. Dollar makes American workers and products more competitive.
We may just be getting exactly what we need to transition our labor force into the global economy - an opportunity to compete.
Higher prices for goods don't translate into similarly higher prices for services since that work is usually performed within the U.S. by American workers. I believe that this will lead to more service-oriented jobs and a relative decline in consumption within the U.S.
Leapfrog Nations will continue to consume and grow and herein lies our best opportunity. We can become the world leader in supplying the developing world with innovative sustainable goods and the services needed to deploy them.
During last week's Democratic debate between Senator Hillary Clinton and Senator Barack Obama in Ohio, a state with many manufacturing jobs, both mentioned 'green' jobs and opportunities for Ohio to become a leader in manufacturing 'green' equipment such as wind turbines. I wholeheartedly agree with the idea - but let's take it further, let's take it where they really need the equipment, let's take it to the Leapfrog Nations!
There will be domestic opportunities, as well, with prices for fuel and food continuing to surge. Increases in conservation and 'greener' products and processes with fuel a certain amount of the economy with good jobs in construction, engineering, and manufacturing leading the way.
From my admittedly long-term macro-economic perspective this economic slowdown (perhaps recession) could have a silver lining. If our leadership can see these advantages and recognize the opportunties that exist in the Leapfrog Nations then America might just be able to remain the richest and most powerful nation on earth for a long time to come.
Let's go feed some frogs!
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