In the midst of all the doom and gloom about our economy, Washington Post columnist David Ignatius offers his evidence that there really is a light at the end of the tunnel.
Ignatius believes that the real prospect exists for an American economic boom a decade or so from now. He cites studies from two bi-partisan think tanks as rationale for his optimism.
First, Ignatius believes that America is heading into an era of energy security and growth. He argues that due to the rapid expansion of oil and gas production from shale, America is likely to become the world’s number one producer of oil, gas and biofuels by 2020…even surpassing energy superpowers Russia and Saudi Arabia. As a result we will no longer rely on the Middle East or compete with China and India for resources.
The other area in which Ignatius believes that America is poised to explode is in manufacturing. Ignatius reports that the revival of American manufacturing will be driven by the low cost of electricity in the US which will be relatively flat through the rest of the decade and roughly one-third that of economic competitors such a Spain, France or Germany. He cites studies by the Boston Consulting Group (BCG) that show that there is what they refer to as a “reshoring” back to America of manufacturing that previously migrated offshore, especially to China. BCG believes that by 2015 China’s cost advantage will have shrunk to the point that many manufactures will prefer to open new plants in the US. BCG economists believe that the cost-risk inflection point in seven key areas will begin tipping away from China and toward the US: computer/electronics, appliances/electrical equipment, machinery, furniture, fabricated metals, plastics/rubber and transportation goods. BCG estimates that as these industries move back to the US the economy will add $80-$120 billion in output and 2-3 million new jobs.
These estimates are backed up by a recent survey of executives at 106 US based companies with annual sales of over $1 billion dollars. The movement toward reshoring manufacturing is very real.
In a recent interview Ignatius pointed out that these positive trends are the result of private industry and investment…without the aid of government assistance.
We’d like to point out that these positive trends are occurring are in spite of the alleged “oppressive government regulations” and “high corporate taxes” that conservative politicians believe to be the root of our economic malaise.
Congratulations to David Ignatius on his fine reporting; and our thanks for providing a source of hope in these tough economic times.
You can read David Ignatius’ column: “US energy, manufacturing ready for a boom” in its entirety in today’s edition of the Washington Post.