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Jerry Jasinowski

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Rays of Sunshine

Posted: 11/16/2012 8:47 am

There is more than enough gloom clouding the economic picture these days -- stubbornly high unemployment, the world tipping toward recession, and of course the prospect of careening over the fiscal cliff -- so it is worth noting that there is in fact enough sunshine out there to justify a bit of optimism about the future.

In fact, we are poised on the brink of turning the corner on three of the most vexing challenges that have dogged our economy for years -- energy, exports and housing.

The energy story is truly remarkable. For the past few years, as everyone knows, we have been accessing abundant reserves of natural gas thanks to a revolutionary new drilling technique called "fracking." The liquefied natural gas terminals we had been building to import natural gas will now be used to export the stuff, and of course the price of natural gas is very low which means more money in the hands of consumers.

Now we are belatedly learning that the same fracking technology also works for oil. For as long as I can remember, we have lamented our dependence on foreign oil which the experts assured us was inevitable because domestic supplies were dwindling. Imported oil not only added to our trade deficit, but also left us dependent on some of the most unstable nations on the planet, many of which regard the U.S. as a deadly enemy. Now we are accessing vast amounts of oil that was simply not accessible before. Production is rising each month and the International Energy Agency projects the U.S. will be a net oil exporter by 2030.

Exports also have been on an upward climb all year hitting $187 billion in September, and most of that is manufactured goods. To get our economy back on track, we have to hike exports and we are doing so. That augurs well for our economy in the months ahead.

And so will an end to the housing crisis which is at last in sight. The collapse of the housing bubble in which trillions of dollars of paper wealth disappeared overnight has kept the economy in a funk for four years. Housing is a huge component of our economy. Since 2007, housing has coughed up 2 million jobs. But lo and behold, housing starts in the U.S. surged 15 percent in September to the highest level in four years, exceeding all forecasts. And the percentage of mortgage holders at least two months behind on their payments fell in the third quarter to 5.41 percent, the lowest point in more than three years, another positive indicator.

There of course many reasons for the housing rebound -- historically low interest rates and the rapid turnaround of foreclosed properties by investors -- but perhaps the main one, and the most promising, is increasing population. The number of households in the U.S. grew 2 percent in 2011, the biggest gain in 10 years. A growing number of new families buying houses means growing demand for appliances, furniture and all that other good stuff.

Now all we need is for Congress and the president to do their job and produce a balanced fiscal reform plan that provides for near term growth and long term deficit reduction. That will send a strong signal to the markets and give the economy a real boost.

Jerry Jasinowski, an economist and author, served as President of the National Association of Manufacturers for 14 years and later The Manufacturing Institute. Jerry is available for speaking engagements.

 
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